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Income statement

The income statement shows the revenue a company earned, the expenses it incurred and the resulting profit or loss over a period. The income statement (profit or loss statement) presents the flow from sales through cost of sales, operating expenses, financing costs and tax to net profit, both quarterly and cumulatively.
Contents
  1. 1.Key points
  2. 2.Formula / calculation
  3. 3.Interpretation
  4. 4.Pitfalls
  5. 5.Frequently asked questions

Key points

  • Unlike the balance sheet it describes a period, not a moment.
  • Sales growth reflects demand, margins reflect efficiency and pricing power, and net profit is what is left for shareholders.
  • one-off gains (asset sales, revaluations) can inflate net profit.

Formula / calculation

Sales − Cost of sales = Gross profit; Gross profit − Operating expenses = Operating profit; Operating profit ± Financial income/expense − Tax = Net profit. Yatırımcı.AI computes quarterly and annualised sales, EBITDA and net profit series from KAP reports.

Interpretation

Sales growth reflects demand, margins reflect efficiency and pricing power, and net profit is what is left for shareholders. Year-on-year comparisons (same quarter last year) are preferred to strip out seasonality.

Pitfalls

one-off gains (asset sales, revaluations) can inflate net profit. FX gains and losses cause large swings in the financing line. When deriving quarterly figures from cumulative statements the prior period must be subtracted.

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Frequently asked questions

The income statement shows the revenue a company earned, the expenses it incurred and the resulting profit or loss over a period.

Sales − Cost of sales = Gross profit; Gross profit − Operating expenses = Operating profit; Operating profit ± Financial income/expense − Tax = Net profit. Yatırımcı.AI computes quarterly and annualised sales, EBITDA and net profit series from KAP reports.

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