Income Statement Breakdown (Part 4): Finding the Bottom Line
We’ve been taking apart the income statement to help you better understand it and so that you can find money-saving, profit-increasing opportunities inside of it. This is the fourth and final step in the process and here we are getting close to the bottom line!
So far we’ve…
- Looked at Revenues and came away with Net Sales
- Looked at Cost of Goods Sold (either accrual or cash-based) and came away with Gross Profit
- Looked at Operating Expenses and came away with Net Profit
But those are not the only people who have their hand in the cash register! Let’s not forget banks and the government. In this fourth and final section of the income statement breakdown, we need to make sure they get their share.
Like the other sections, you add up the various expenses you have here and subtract it from Net Profit. This section is sometimes called “Non-Operating Expenses”. If you have shareholders, some of their payouts go here, too.
Now let’s look at this part of the income statement and we’ll compare how the accrual and cash-based system work so you can see both in action:
Tags: Accrual, Banks, Bottom Line, Cash Register, Gross Profit, Income Report, Income Statement, Money, Net Income, Net Profit, Net Sales, Operating Expenses, People, Shareholders, Statement Numbers
