The Income Statement, also referred to a Profit and Loss Statement, lists the company’s net sales and all expenses that contribute to the eventual net income (or loss).
The Income Statement is one of three key financial statements that companies are required to disclose to investors every three months (or quarter).
On the left is a photo of Apple’s second quarter 2020 income statement.
Net sales are also referred to as revenue. Net sales are the total amount of income the company generated before accounting for cost of sales or operating expenses. In the second quarter of 2020, Apple generated $58.313 billion in next sales, with $44.965 billion coming from products and $13.348 billion coming from services.
Cost of sales is the total amount of money the company spent to produce its products and services. In Q2 2020, Apple spent $35.943 billion to produce its products and services.
Gross margin is net sales minus the cost of sales. In Q2 2020, Apple generated $22.37 billion in gross margin.
Operating expenses are the total amount of money the company spent paying employees, marketing products, and investing in future products. In Q2 2020, Apple spent $9.517 billion on operating expenses.
Operating income is gross margin minus operating expenses. In Q2 2020, Apple generated $12.853 billion in operating income.
Other income is income not related to net sales. In Q2 2020, Apple generated $282 million in other income.
Income before provision for income taxes is operating income plus other income. In Q2 2020, Apple generated $13.135 billion in income before provision for income taxes.
Provision for income taxes is the amount the company paid in taxes. In Q2 2020, Apple paid $1.886 billion in income taxes.
Net income is the amount of money the company makes after all expenses and taxes are accounted for. In Q2 2020, Apple generated $11.249 billion in net income
Earnings per share (EPS) is the amount of net income generated per share. Note that EPS is not money that you will receive as a shareholder, unless the company pays a dividend. In Q2 2020, Apple generated $2.58 in basic earnings per share.