To calculate the income statement:
Gross Profit:
\[ \text{Gross Profit} = \text{Revenue} - \text{Cost of Goods Sold} \]
Operating Profit:
\[ \text{Operating Profit} = \text{Revenue} - \text{COGS} - \text{Operating Expenses} \]
Net Profit:
\[ \text{Net Profit} = \text{Revenue} - \text{All Expenses} \]
An income statement generally includes three key metrics: gross profit, operating profit, and net profit. These metrics are crucial for determining the true profitability of any company. Together, they provide a more complete picture of a company's financial performance than any single metric alone.
Let's assume the following values:
Using the formulas:
Step 1: Calculate Gross Profit:
\[ \text{Gross Profit} = 100,000 - 40,000 = 60,000 \]
Step 2: Calculate Operating Profit:
\[ \text{Operating Profit} = 100,000 - 40,000 - 20,000 = 40,000 \]
Step 3: Calculate Net Profit:
\[ \text{Net Profit} = 100,000 - 70,000 = 30,000 \]
Let's assume the following values:
Using the formulas:
Step 1: Calculate Gross Profit:
\[ \text{Gross Profit} = 200,000 - 80,000 = 120,000 \]
Step 2: Calculate Operating Profit:
\[ \text{Operating Profit} = 200,000 - 80,000 - 50,000 = 70,000 \]
Step 3: Calculate Net Profit:
\[ \text{Net Profit} = 200,000 - 150,000 = 50,000 \]