The income statement

Introduction to Financial Statements in Power BI

Nikisha Alcindor

Investor and Data Scientist

Income statement

Cool imange of an income statement

Revenues and expenses for a specific period of time
Shows net income (or net loss)
Alternative Terminology
- P&L or profit and loss statement
- Earnings statement

A simple income statement

Company 1	Values
Revenue	$300
Expenses	$200
Profit	$100

Profit

Company 2	Values
Revenue	$300
Expenses	$400
Profit	-$100

loss

Important metrics

Gross Revenue

Net Revenue

Gross Profit

Net Profit

Gross revenue

Gross Revenue (Gross Sales)

Earnings without subtracting expenses.

Example

You sell 10 juicers of $100
Gross Revenue = 10 x $100 = $1000

juicer

Net revenue

Earnings minus discounts, or money lost from product returns/missing products
Net Revenue = Gross Revenue - Discounts - Returns
Amount a company keeps from its sales

Example

You sell 10 juicers of $100, but need to return the money for 1 damaged juicer.
Net Revenue = 1000 - $0 - 100 = 900

juicer

Gross profit

Profit after subtracting the cost of goods sold (COGS) from its net revenue
Gross profit = Net Revenue - COGS
COGS refers to the direct costs of producing the goods sold by a company*

Example

You sell 10 juicers of $100 with a cost of $60, but need to return the money for 1 damaged juicer.
Gross profit = $900 - $600 = $300

juicer

¹ https://www.investopedia.com/terms/c/cogs.asp

Net profit

Profit after subtracting COGS, operating and other expenses, interest and taxes.
Net profit = Gross profit - Expenses
Also referred to as the "bottom line"

Example

Same scenario as before, but your salary costs and taxes are both $50.
Net profit = $300 - $50 - $50 = $200

juicer

Important metrics: summary

Gross Revenue

Total earnings
Gross Revenue = 10 x $100 = $1000

Net Revenue

Earnings a company keeps from its sales
Net Revenue = Gross Revenue - Discounts - Returns
$1000 - $0 $100 = $900

Gross Profit

Profit after subtracting COGS.
Gross profit = Net Revenue - COGS
$900 - $600 = $300

Net Profit

Profit after subtracting all expenses
Net profit = Gross profit - Expenses
$300 - $100 = $200

EBITDA

Earnings before interest, taxes, depreciation, and amortization (EBITDA).
An alternate measure of profitability besides net profit.

A photo of a person calculating financial information

¹ https://www.investopedia.com/terms/e/ebitda.asp#toc-what-is-ebitda

Income statement

Focuses on revenues and expenses
Reports losses and gains over a period of time
Uses the following metrics:
- Gross revenue
- Net revenue
- Gross profit
- Net profit
- EBITDA

Cool imange of an income statement

Let's practice!

Introduction to Financial Statements in Power BI