Series 6: 7.4.1.1. Income Statement

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7.4.1.1. Income Statement

An income statement is a document that summarizes a company’s sales, expenses, and profits over a given period of time. The income statement starts with sales, also called revenues, which is the total amount of money taken in by the company, then subtracts the company’s various expenses, in a particular order, to arrive at the company’s profits.

Income Statement for Northwest Coffee, Inc. (in millions)

Millions of Dollars

Margin

Sales/Revenues

100.3

COGS

(55.7)

Gross Profit

44.6

44.5%

Operating Expenses

SG&A

(20.4)

Research and Development

(2.4)

Depreciation and Amortization

(1.3)

Total Operating Expenses

(24.1)

Operating Income (EBIT)

20.5

20.4%

Interest Expense

(2.0)

EBT

18.5

Taxes (35%)

(6.5)

Net Income (Net Earnings)

12.0

12.0%

Cost of goods sold (COGS) is the first expense to be subtracted from sales. COGS is the cost of pro

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