3. Income statement Income statements illustrate what revenues the firm collects, the expenses required to support revenues, and the firm's profitability over a specified period of time White balance sheets are a "snapshot of the firm's status on a specific date, income statements reflect performance over a period of time. Publicly held companies generate income statements every quarter (three months) and for their annual report. INCOME STATEMENT (Thousands of dollars) Net revenues - Cost of goods sold - Operating expenses - Research & development expense Operating costs excluding depreciation - Depreciation and amortization expense Operating income (EBIT) Interest expenso Taxable incomo - Taxes Net income - Preferred dividends Net income available to common shareholders Yr 2 Income Statement $ 7,000 Roll your mouse over each income statement (2,781) account to learn about it. (1.809) (912) $ (5,502) (223) $ (1.275) (190) S 1,085 (434) $ 651 (9) $ 642 $ Dividends Addition to retained earnings 321 321 $ In this example, the firm pays half of its earnings as dividends to its stockholders and retains the other half. This is done for simplicity here, but real firms weigh a multitude of factors in setting their dividends. This issue will be covered in your finance course. Check Your Understanding The gross margin for this fictional company is 33.3% 60.3% 9.24 O 18.20 If the firm has 200,000 common shares outstanding, its earnings per share (EPS) is while its dividends per share (DPS) is With its earnings, a firm has a decision to make about whether to pay common dividends or On the income statement, Interest expense is preferred dividends are and common dividends are Wages are considered a(n) A company usually expenses expected to bring are very uncertain and dima to tiene when it incurs. them, because the future benefits that this spending is