OBJECTIVE
Students will analyze an Income Statement by defining and calculating individual components in sample income statements.
Activity 2: INCOME STATEMENT CALCULATIONS |
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Net profit is also referred to as the bottom line, net income, or net earnings. The formula for net profit is as follows:
Total Revenue -Total Expenses = Net Profit
Net profit is found on the last line of the income statement, which is why it's often referred to as the bottom line.
Let's look at a hypothetical income statement for Company XYZ:
Income Statement for Company XYZ, Inc.
Total Revenue $100,000
Cost of Goods Sold ($ 20,000)
Gross Profit $ 80,000
Operating Expenses
Salaries $10,000
Rent $10,000
Utilities $ 5,000
Depreciation $ 5,000
Total Operating Expenses ($ 30,000)
Interest Expense ($ 10,000)
Taxes ($ 10,000)
Net Profit $ 30,000
By using the formula we can see that
Net Profit = $100,000 - $20,000 - $30,000, - $10,000 - $10,000 = $30,000Net profit is also referred to as the bottom line, net income, or net earnings. The formula for net profit is as follows:
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