FINANCIAL
STATEMENT ANALYSIS 1-13
INCOME STATEMENT
Summary of
operations and
profitability
The Income Statement provides a summary of a company's operations
and profitability over a given period of time (at the end
of a month, quarter, or year). It shows the value of the products and
services sold by the company for the reporting period, the costs
incurred in achieving those sales, and the distribution of the residual
income. The Income Statement provides an analyst with clues about
the profitability of a company's operations. A typical Income
Statement is shown in Figure 1.2.
XYZ Corporation
December 31, 1993
(In Millions $)
Net Sales
287.6
Cost and Expenses:
Labor and Materials
249.3
Depreciation
8.9
Selling Expenses
1.6
General and Administrative
3.2
Lease Payments
2.1
Total Operating Costs
265.1
Net Operating Income (EBIT)
22.5
Interest Expenses
6.0
Earnings Before Taxes
16.5
Taxes (at 40%)
6.6
Net Income Before Preferred Dividend
9.9
Preferred Dividend
3.7
Net Income to Common
6.2
Common Dividend
4.0
Earnings Retained
2.2
Figure 1.2: Income Statement
Description of
accounts
Let's look at a description of each account included in the example
Income Statement for XYZ Corporation.
·
N
ET
S
ALES
total value of all goods or services sold by the company
as part of its normal business operations during the period