The income statement focuses on the revenue, expenses, gains, and losses of a company during a particular period. Also known as the profit and loss (P&L) statement or the statement of revenue and expense, an income statement provides valuable insights into a company’s operations, the efficiency of its management, underperforming sectors, and its performance relative to industry peers.
The income statement focuses on four key items: revenue, expenses, gains, and losses. It does not differentiate between cash and non-cash receipts (sales in cash vs. sales on credit) or cash vs. non-cash payments/disbursements (purchases in cash vs. purchases on credit). It starts with the details of sales and then works down to compute net income and eventually earnings per share (EPS). Essentially, it gives an account of how the net revenue realized by the company gets transformed into net earnings (profit or loss).
| Income Statement 5 Year Summary | ||||||
|---|---|---|---|---|---|---|
| Period Ending | 12/31/17 | 12/31/18 | 12/31/19 | 12/31/20 | 12/31/21 | |
| Sales | $- | $585,000 | $13,925,000 | $31,025,000 | $50,925,000 | |
| Cost of goods sold | - | 263,250 | 6,266,250 | 13,961,250 | 22,916,250 | |
| Gross Profit | $- | $321,750 | $7,658,750 | $17,063,750 | $28,008,750 | |
| Selling Expenses: | ||||||
| Advertising | - | 7,500 | 41,000 | 65,000 | 76,000 | |
| Benefits | - | 3,000 | 12,000 | 12,000 | 12,000 | |
| Commission expense | - | 35,100 | 835,500 | 1,861,500 | 3,055,500 | |
| Depreciation | - | 3,999 | 16,000 | 16,000 | 16,000 | |
| Entertainment | - | 2,400 | 10,000 | 14,000 | 16,000 | |
| Insurance - property | - | 1,200 | 4,800 | 4,800 | 4,800 | |
| Payroll | - | 25,002 | 100,000 | 100,000 | 100,000 | |
| Payroll taxes | - | 5,001 | 20,000 | 20,000 | 20,000 | |
| Rent | - | 3,000 | 9,000 | 9,000 | 9,000 | |
| Samples | - | 15,000 | 60,000 | 60,000 | 60,000 | |
| Supplies | - | - | - | - | - | |
| Travel | - | 6,000 | 24,000 | 24,000 | 24,000 | |
| Total Selling Expenses | $- | $107,202 | $1,132,300 | $2,186,300 | $3,393,300 | |
| Administrative Expenses: | ||||||
| Bank charges | 240 | 240 | 400 | 2,000 | 3,000 | |
| Benefits | 9,600 | 10,200 | 12,000 | 12,000 | 12,000 | |
| Depreciation | 1,596 | 3,846 | 10,600 | 10,600 | 10,600 | |
| Dues & subscriptions | - | - | 400 | 400 | 400 | |
| Entertainment | - | - | - | - | - | |
| Insurance - property | 1,200 | 1,200 | 1,200 | 1,200 | 1,200 | |
| Office supplies | 1,200 | 2,400 | - | - | - | |
| Payroll | 84,996 | 92,997 | 117,000 | 117,000 | 117,000 | |
| Payroll taxes | 17,004 | 18,603 | 23,400 | 23,400 | 23,400 | |
| Professional fees | 1,000 | - | - | - | - | |
| Rent | 12,000 | 11,000 | 9,000 | 9,000 | 9,000 | |
| Research Samples | 18,000 | - | - | - | - | |
| Travel | 7,200 | 15,000 | 6,000 | 6,000 | 6,000 | |
| Utilities | - | 2,000 | 6,400 | 7,200 | 7,600 | |
| Total General & Administrative Expenses | $154,036 | $157,486 | $186,400 | $188,800 | $190,200 | |
| Total Operating Expenses | $154,036 | $264,688 | $1,318,700 | $2,375,100 | $3,583,500 | |
| Total Operating Income (Loss) | $(154,036) | $57,062 | $6,340,050 | $14,688,650 | $24,425,250 | |
| Other Expenses (Income): | ||||||
| Interest Expense | 11,633 | 143,863 | 215,733 | 315,732 | 25,600 | |
| Interest (Income) | (261) | (7,941) | (20,159) | (38,964) | (46,931) | |
| Income Tax Expense | - | - | 2,150,567 | 5,044,159 | 8,556,303 | |
| Total Other Expenses (Income) | $11,372 | $135,922 | $2,346,141 | $5,320,927 | $8,534,972 | |
| Net Income (Loss) | $(165,408) | $(78,860) | $3,993,909 | $9,367,723 | $15,890,278 | |
