Business Growth Accelerator
How to read an income statement
- Total revenue: Money brought in from sales of goods and services
- Cost of goods sold: Amount of money spent to buy or create products sold
- Gross profit = Total revenue – Cost of goods sold
- Operating expenses: salaries, marketing, rent – can’t be linked directly to the production of goods and services
- Operating income: Money from core operations
- Other income/expenses: Interest from savings accounts, interest on loans
- Net income = Income before tax – income tax
- Net income is known as the bottom line