Income Statement Cost Analysis

This income statement shows that the company brought in a total of 4 358 billion through sales and it cost approximately 2 738 billion to achieve those sales for a gross profit of 1 619 billion.

Income statement cost analysis. The income statement is one of a company s core financial statements that shows their profit and loss over a period of time. This income statement analysis lesson retains a sample income statement oldie but goodie from microsoft and it works because it covers all the bases and poses an understandable example. Cost volume profit cvp analysis is a tool that helps management determine the proper mix of products to maximize profit while taking costs and volume of sales into consideration. A total of 560 million in selling and operating expenses and 293 million in general and administrative expenses were subtracted from that profit leaving an operating income of 765 million.

2001 2000 and 1999. The profit or loss is determined by taking all revenues and subtracting all expenses from both operating and non operating activities this statement is one of three statements used in both corporate finance including financial modeling and accounting. For example you can compare one company s profits to its competitors by examining its gross profit margin operating profit margin and net profit margin. The income statement below is from microsoft s 2001 annual report and it shows the full fiscal year income statement figures for three years.

This analysis is used to understand the cost structure of a business and its ability to earn a profit. The analysis of the income statement involves comparing the different line items within a statement as well as following trend lines of individual line items over multiple periods. Income statement analysis investors can use income statement analysis to calculate financial ratios that can be used to compare the same company year over year or to compare one company to another.