Definition
Also known as the income statement, the earnings statement is a standard financial accounting document that outlines the revenues and expenses in a given reporting period. Performance is generally measured in terms of net profit or loss.
Explanation
An earnings statement, along with the statement of cash flows and balance sheet, is one of the three major financial accounting documents published by companies. The earnings statement provides a summary of the revenues (income) and expenses (costs) incurred by a company over time. Typically, statements are published by publicly held companies on a quarterly or annual basis.
The statement is usually divided into an operating and non-operating section. Non-operating items are usually non-recurrent events, extraordinary items or those associated with discontinued operations. Revenues and costs associated with operating items are of interest to creditors, analysts and investors, since they provide insights into the ability of the company to operate profitably.
Example
The table below provides a high level summary of the components of the earnings statement (continuing operations).
Total Revenue | 29,611,000 |
Cost of Goods Sold | (15,693,000) |
Gross Profit | 13,918,000 |
Operating Expenses | |
Selling General and Administrative | (7,740,000) |
Operating Income or Loss | 6,178,000 |
Income from Continuing Operations | |
Interest Expense | (221,000) |
Income Tax Expense | (1,674,000) |
Net Income from Continuing Operations | 4,283,000 |
Related Terms
The income statement is a financial accounting report that demonstrates how net income, or profit, is derived from revenues. The main categories appearing on an income statement include revenues, cost of goods sold, operating expenses, non-recurring items and net income.
Moneyzine EditorNovember 6th, 2024
Also known as a statement of financial position, the balance sheet is used to show the financial health of a company at a particular point in time. The balance sheet consists of assets, liabilities, and owner's equity in the company. It is one of the four key financial statements issued by public companies.Moneyzine EditorNovember 6th, 2024- The financial accounting term net Income is used to describe a measure of a company's profitability. Net income is a line item appearing on the income statement, and is derived by subtracting expenses from revenues.Moneyzine EditorNovember 6th, 2024
The financial ratio earnings per share, or EPS, is perhaps the single most popular variable used by analysts and investors to evaluate the profitability of a company. EPS measures the profitability of a company on a per share basis.Moneyzine EditorNovember 6th, 2024
