used to measure the performance of a firm over a period of time, usually reported on an annual basis. It always includes four sections: operations section, nonoperating section, tax section and result section.
1. Operations section reports the firm's revenues and expenses in its business operations, including:
Total of operating revenues;
Cost of goods sold;
Selling, general and administrative expenses;
Depreciation;
2. Nonoperating section reports all of the firm's financing costs, mainly including:
Interest expense;
3. Tax section reports the amount of income taxes, including:
Current tax;
Deferred tax (represent a liability);
4. Result section shows:
Net income (represented as earnings per share )
Note: balance sheet may be viewed as a snapshot, while income statement can be viewed as a video recording of the activities and performance of a firm between two snapshots