Income Statement Glossary

Subsection of: Creating an Effective Business Plan

Adapted from content excerpted from the American Express® OPEN Small Business Network

Income Income generated by the business
Cost of goods What it costs the business to sell its inventory or service
Gross profit margin Revenue minus cost of goods
Operating expenses Overhead and labor expenses necessary to run the business
Total expenses Sum of overhead and labor expenses
Net profit Gross profit minus total expenses
Depreciation The amount by which the value of a company asset has fallen in a given time period
Net profit before interest Net profit minus depreciation
Interest All interest on debts
Net profit before taxes Net profit minus interest
Profit after taxes Profit minus interest. This is also referred to as the bottom line.
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