Calculate net income from revenue, cost of goods sold and operating expenses, with optional interest and taxes, plus gross profit and operating income.
Income Statement Formula
The following 3 equations are used to calculate and generate an income statement.
Enter revenue, COGS and operating expenses for the same reporting period. Optional amounts default to zero. Do not count depreciation/amortization again if included in another expense row. Negative other income denotes a loss; negative tax denotes a benefit. In the equations, OP is operating profit, GP is gross profit, OPEX is operating expenses excluding separate D&A, NI is net income, P is pre-tax income and Tax is tax expense (negative for a benefit). Pre-tax income equals operating profit plus other income, minus other expenses and interest. The tool summarizes entered USD amounts in exact cents and does not estimate tax liability. Zero revenue permits a net loss but makes margins unavailable.
Income Statement Definition
An income statement generally includes 3 metrics. Those are gross profit, operating profit, and net profit. They are 3 key metrics for determining the true profitability of any company. The 3 of them together make a more complete picture than any single metric.
Income Statement Example
How to calculate an income statement?
- First, determine the gross profit.
Determine the gross profit from the revenue and cost of goods sold.
- Next, determine the operating profit.
Calculate the operating profit using the sales, COGS, and operating expenses.
- Finally, calculate the net profit.
Calculate the net profit using the revenue and total expenses.
FAQ
An income statement is a financial statement that displays the gross profit, operating profit, and net profit of a company.
