This! together with the balance sheet and the cash flow statement! provides an indication of the economic health of the organization. With these! it is possible to observe in detail and accurately whether the company is making profits or losses in its operation and make strategic decisions to achieve the stated objectives! even for marketing .
Do you want to know more about the income statement? Read this content until the end!
Main accounts that make up the income statement
How to get the income statement?
Why is the income statement important for your company?
What is the income statement?
This statement! also called a profit and loss statement! is a type of financial report that explains and reflects in detail the expenses and income that a company had during a certain period of time.
Therefore! the income statement allows us to understand what dentist data the business is like at the operational level! the fixed and variable costs necessary to maintain sales! the capacity to generate sales! administrative expenses and debts that affect the company in a certain range of dates.
What is the purpose of the income statement?
On the one hand! this financial statement provides information about the value of the company! data that is interesting for investors. And! on the other hand! it allows debtors to know how easy it is for the company to return their money.
That is! the analysis of an income statement explains the profitability of an organization and helps it make the right decisions for its growth and for establishing itself in the market.
Main accounts that make up the income statement
The income statement is made up of nine accounts that seek to answer questions such as what the company sells! how much it is selling! how expenses are managed! the profits it is generating! and more.
Do you want to know what these accounts are? We explain them below:
- Sales
The first piece of data found in an income statement is this one and it corresponds to all the income that a company has in a certain period that is being analyzed. - Costs of sales
It refers to the amount of money that the company had to pay for the product or service it offers: indirect labor! logistics costs! among others. - Gross profit
Because it is the difference between sales and the cost of sales! it indicates what the company is earning in gross terms with the product or service it offers.
4. Administrative or operating expenses
Expenses involved in the operation of the organization are included! such as: rental of premises! basic services! payroll without commissions! among others.
Marketing and advertising expenses are also included here.
- Operating profit
It is the indicator that measures the profit generated by a company without taking into consideration taxes! financial expenses or other types of accounting expenses that do not imply a real outflow of money from the organization.
And it is calculated by subtracting gross profit from operating expenses.
- Financial expenses
These are payments that must be covered by the concept of interest on bank commissions or a loan.
7. Profit before taxes
It refers to the loss or profit that a company has after financial and operational commitments are covered! but does not take into consideration income tax.
- Tax
These are all the contributions that the company makes What is the to the government in which it operates based on the profits it has generated. - Net profit
It is the result obtained by the company after having met its operating! financial and tax expenses.
How to get the income statement?
To obtain the income statement! the 9 accounts mentioned above are us! and broadly speaking! it is obtained by following the steps explained below:
The period to be analyz is chosen
The total amount of sales is indicat: subtracting returns and discounts.
Gross profit is calculated ! that is! the costs that influenc the products to reach the final consumer are subtract from the previous point.
Operating sales expenses are determin: sum of rent! advertising ! services! among others.
Operating profit is calculat by subtracting gross profit minus operating sales expenses.
Financial income is add : this is not relat to the product or service offer but to income such as bank loans or government support.
Financial expenses are subtract : this corresponds to the interest paid on the loan! other expenses that are not specifi are also subtract and other undefin income is add.
With the above! we obtain the result before tax.
Income tax is calculat: it depends on the profits and the laws in force in the entity in which the company operates.
Net profit is obtain : Income tax is subtrac from the result before income tax.
And that’s it!
I leave you these 3 contents here! read them after you finish:
Discover what a KPI is and learn how it can help you measure gambler data your marketing results
How to measure results in digital marketing
How long does SEO take to bring results? We support you in answering this complex question
Why is the income statement important for your company?
This is of vital importance because it is a support element for the management of any business! as it provides valuable information that allows efficient strategic planning to obtain results in the short! medium and long term. Its importance lies in the fact that:
It provides an accurate assessment and reflects a company’s profitability and its ability to generate profits.
Help with the above to know how resources can be optimized to maximize profits.
It allows cash flows to be estimated! as it facilitates the projection rick middaugh vice president of information technology of sales in a more precise way by having it as a basis.
Identify weaknesses! because we can know the part of the process in which the greatest amount of economic resources are consumed.
As you can see! an income statement is key for any organization! regardless of its size! as it allows us to know relevant data that will help you make the best decisions for your company.
Now! if you are looking not only to know the economic performance of your company but also want to improve your work management! we recommend that you learn about the OKR methodology! as it will help you achieve team progress objectives through qualitative and quantitative measurement.
Are you ready? Click here to download
our OKRs ebook!What is an information poster and what is it used for?
An information poster is a physical communication resource used by companies and organizations to convey a message in a brief and simplified manner. Learn more about them by reading this post!
Jesus Cardenas
May 8! 22 | 5 min read
information poster
Among the many techniques and resources that exist in traditional advertising or propaganda! information posters are a very effective factor when it comes to attracting interest in a brand through physical channels.
When a company! especially an SME ! begins its journey in the business world! it is advisable to make use of all the disciplines and areas that can favor its positioning in the market.
An information poster is an important element to show potential clients and consumers of a business in a visual way some important information that you want to convey.
What is an information poster?
What is the purpose of an information poster?
Differences between an informative poster and a formative one
Characteristics of an informative poster
Now! do you know what it is?
What is an information poster?
In short! it is a visual representation of some relevant information for users or clients of a brand ! organization or institution that they should know! before! during or after using their products or services.
It goes far beyond the famous posters! as they are focus on attracting attention and transmitting a message in a clear! simple and accessible way.
These can be the physical support of some type of advertisement ! message or design that you want to position in front of people! whether on paper! cardboard or similar material and that carries visual! textual or typographic content.
What is the purpose of an information poster?
Without a doubt! this is one of the most common forms of communication in our history! as it allows a message to be creat and disseminat on a massive scale! without much effort or necessary resources.