An income statement, along with the balance sheet and cash flow statement, is one of the primary financial statements used to assess a company’s financial position. Also known as a “profit and loss statement” or “statement of operations,” an income statement measures a company’s financial performance over a specific period of time. It is typically generated monthly, quarterly or annually, and lists all relevant revenues, expenses, gains and losses in order to calculate the company’s net income for the period.
Understanding a company’s profitability is vital to ensuring it will deliver necessary profits and stay solvent. In addition to reporting a company’s profitability for a period of time, comparing its profitability to a prior time period is equally important. This helps the business gain a view of whether the company’s sales and profits have increased over time. It can also be an important tool in making informed business decisions to attain required profitability and cash flow. Income statements can also help demonstrate a company’s return on investment, risk, financial flexibility and operating capabilities.
This income statement template can be downloaded and used by any type of business. It should be modified to include all of the relevant revenues and expenses that apply to the company. To fill out this spreadsheet, enter the applicable values in their respective cells. The total amounts will automatically populate based on the embedded formulas. An example worksheet is also included to help guide you through the process.