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Financial statements and reports The income statement, also known as the profit and loss ( P&L ) statement, provides a snapshot of the financial performance
Financial statements and reports
The income statement, also known as the profit and loss P&L statement, provides a snapshot of the financial performance of a company during a specified period of time. It reports a firm's gross income, expenses, net income, and the income that is available for distribution to its preferred and common shareholders.
The income statement is prepared using the generally accepted accounting principles GAAP that match the firm's revenues and expenses to the period in which they were incurred, not necessarily when cash was received or paid. Investors and analysts use the information given in the income statement and other financial statements and reports to evaluate the company's financial performance and condition.
Consider the following scenario:
Blue Hamster Manufacturing Inc.s income statement reports data for its first year of operation. The firm's CEO would like sales to increase by next year.
Blue Hamster is able to achieve this level of increased sales, but its interest costs increase from to of earnings before interest and taxes EBIT
The company's operating costs excluding depreciation and amortization remain at of net sales, and its depreciation and amortization expenses remain constant from year to year.
The company's tax rate remains constant at of its pretax income or earnings before taxes EBT
In Year Blue Hamster expects to pay $ and $ of preferred and common stock dividends, respectively.
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Financial statements and reports
The income statement, also known as the profit and loss P&L statement, provides a snapshot of the financial performance of company during a specified period of time. It reports a firm's gross income, expenses, net income, and the income that is available for distribution to its preferred and common shareholders.
The income statement is prepared using the generally accepted accounting principles GAAP that match the firm's revenues and expenses to the period in which they were incurred, not necessarily when cash was received or paid. Investors and analysts use the information given in the income statement and other financial statements and reports to evaluate the company's financial performance and condition.
Consider the following scenario:
Blue Hamster Manufacturing Inc.s income statement reports data for its first year of operation. The firm's CEO would like sales to increase by next year.
Blue Hamster is able to achieve this level of increased sales, but its interest costs increase from to of earnings before interest and taxes EBIT
The company's operating costs excluding depreciation and amortization remain at of net sales, and its depreciation and amortization expenses remain constant from year to year.
The company's tax rate remains constant at of its pretax income or earnings before taxes EBT
In Year Blue Hamster expects to pay $ and $ of preferred and common stock dividends, respectively.
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