What is an Income Statement

It can be called an income statement, income and expense statement, or a profit and loss statement, but what is it and how can we use it. Well it is simply the statement companies give out that tells the general public how they are doing.

Are they making money or losing it and by how much. What is their EPS or net income? Let’s take a look at a few things you should check out when looking at this statement.

The Revenue is amount of money the company took in during a certain time period. This is the raw amount a business makes by operating as a business.

The Expenses is the expenses a company receives just by being a business. Hopefully the expenses are lower than the revenue.

The Net Income is found by subtracting the expenses from the revenue. (Revenue-expenses=net profit). This simply says how much a company made when you take into consideration everything that came in and everything that went out.

The EPS is the amount of money a company made per share of the stock. EPS= (net income)/ (number of shares). This can help give you a decent idea of how much a stock is worth.

The income statement is a valuable piece of stock market information. It can help you to only invest in profitable companies. Without the profit and loss statement stock market investing and especially long term investing would be almost impossible. It allows you to open your eyes to what you are actually investing in.