Income Statement

Question 1

Net Revenues

Answer 1

Total dollar payment for goods and services that are credited to an income statement over a particular time period

Question 2

Cost of Goods Sold

Answer 2

Cost of Goods sold represents a company’s direct cost of manufacture (for manufacturers) or procurement (for merchandisers) of a good or service that the company sells to generate revenue.

Question 3

Gross Profit

Answer 3

Revenues - Cost of Goods Sold

Question 4

Selling, General &
Administrative (SG&A)

Answer 4

Operating costs not directly associated with the production or procurement of the product or
service that the company sells to generate revenue. Payroll, wages, commissions, meal and travel expenses, stationary, advertising, and marketing expenses fall under this line item.

Question 5

Research & Development
(R&D)

Answer 5

A company’s activities that are directed at developing new products or procedures.

Question 6

EBITDA

Answer 6

Earnings before interest, taxes, depreciation & amortization:
Gross Profit - SG&A - R&D.
EBITDA is a popular measure of a company’s financial performance.

Question 7

Depreciation &
Amortization (D&A)

Answer 7

The allocation of cost over a fixed asset’s useful life in order to match the timing of the cost of the asset with when it is expected to generate revenue benefits

Question 8

Other Operating
Expenses/Income

Answer 8

Any operating expenses not allocated to COGS, SG&A, R&D, and D&A.

Question 9

Operating profit (EBIT)

Answer 9

Earnings before interest and taxes: EBITDA - D&A

Question 10

Interest Expense

Answer 10

Interest expense is the amount the company has to pay on debt owed. This could be to bondholders or to banks. Interest expense subtracted from EBIT equals earnings before taxes (EBT)

Question 11

Interest Income

Answer 11

A company’s income from its cash holdings and investments (stocks, bonds, and savings accounts).

Question 12

Non-operating Items

Answer 12

Items peripheral to core operations. Includes gains/losses on investments and revaluation of certain financial assets and debt obligations.

Question 13

Income Tax Expense

Answer 13

The tax liability a company reports on the income statement.

Question 14

Net Income

Answer 14

EBIT - Net Interest Expense - Other Non operating Income - Taxes

Question 15

Basic Earnings Per Share
(EPS)

Answer 15

Net income ÷ Basic Weighted Average Shares Outstanding

Question 16

Diluted EPS

Answer 16

Net income ÷ Diluted Weighted Average Shares Outstanding