Examine major components of the income statement and note the major trends. Discuss  the major sources of revenues and expenses and the growth of these components.

Business & Finance homework help| Business & Finance homework help

The income statement is one of the most important financial statements for investors and analysts, as it provides a comprehensive overview of a company’s revenues and expenses. An income statement includes sales, gross revenue, cost-of-goods sold (COGS), operating costs (OPEX), net profit before taxes and net income after taxes.

Gross revenue or sales generally refers the amount that a business makes from selling products and services over a period of time. COGS are the direct costs associated with producing these goods/services while OPEX includes all other costs such as general administrative expenses and selling & marketing expenses.

Before taxes, net income measures the company’s profitability before accounting for any tax deductions. After taxes subtracts any taxes due. Net income shows what profit was made. Analyzing the change in each of these components over time can give investors a good idea about where the growth is coming. It can also help with making investment decisions such as whether to buy a stock or bond.

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