Income statement glossary

Creating an effective business plan
IncomeIncome generated by the business
Cost of goodsWhat it costs the business to sell its inventory or service
Gross profit marginRevenue minus cost of goods
Operating expensesOverhead and labor expenses necessary to run the business
Total expensesSum of overhead and labor expenses
Net profitGross profit minus total expenses
DepreciationThe amount by which the value of a company asset has fallen in a given time period
Net profit before interestNet profit minus depreciation
InterestAll interest on debts
Net profit before taxesNet profit minus interest
Profit after taxesProfit minus interest. This is also referred to as the bottom line.


To Financials toolbox

 

Business plan FAQs  Creating a business plan – part 1: Introductory elements  Creating a business plan – part 2: Business descriptionCreating a business plan – part 3: The market
Creating a business plan – part 4: Development and productionCreating a business plan – part 5: Sales and marketingCreating a business plan – part 6: ManagementCreating a business plan – part 7: Financials

 

 

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