Earnings Statement Format

 
Share
The earnings statement separates income into three levels for a more thorough analysis of each area of the business. These levels of income are called gross profit margin, operating profit margin, and net profit margin.

Gross Profit Margin

Operating Margin

Net Profit Margin

The earnings statement also separates revenue from the main operations of the business, called operating income, from revenue incidental to the business. Similarly, the earnings statement separates expenses incurred from the main operations of the business, called operating expenses, from those expenses that do not directly contribute to the generation of revenue.

Sunny Sunglasses Shop

Income Statement Example

For the Year Ending
December 31, 2010

Earnings Statement|Income Statement Example

Earnings Statement|Income Statement Example

Since Sunny Sunglasses Shop sells sunglasses, the main operating revenue of $144,000 is from sales. Repairing sunglasses, called “Repair Revenue,” is incidental to the business and categorized outside of operating income.

Similarly, accountants do not consider interest and taxes as an operating expense, and separate it from the main operating expenses of the business. All income and expenses, however, filter down to the final bottom line, called net income.

The Earnings Statement Format

The earnings statement separates gross income, operating income, and net income. These levels of income are measured as:

  • gross profit margin
  • operating profit margin
  • net profit margin

The income statement also distinguishes between operating revenue, revenue generated from the main operations of the business, from non-operating revenue.

Similarly, the income statement also separates operating expenses, those expenses required to support the main operations of the business, from non-operating expenses. Income Taxes and interest are considered non-operating expenses.

From the Earnings Statement Format|Sample Income Statement back to the Profit and Loss Statement Main Page

Online Accounting|Business Accounting Home Page

Share

  One Response to “Earnings Statement Format”

  1. i need accounting formula books

 Leave a Reply

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

(required)

(required)

*