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Income statement

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Income statement

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Engineering Economy.
Engineering Economy, Engineering, Economy, Business and Economy, Business, Economics, Finance, Accounting,

Engineering Economy.
Engineering Economy, Engineering, Economy, Business and Economy, Business, Economics, Finance, Accounting,

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Income statement

  1. 1. 2. Income Statement
  2. 2. Income Statement: Concepts 1. Revenue/ Sales = Income from Sales 2. Cost of Revenue = Manufacturing Cost (Labor/ Material/ Overhead cost) 3. Gross Profit/ Margin (Operating Income) = Revenue/Sales – Cost of Revenue 4. Operating Expenses = Sales/ marketing/ administrative expenses 5. Operating Profit/ Margin (Operating Income Before Taxes) = Gross Profit (Operating Income) – Operating Expenses 6. Income before taxes = Operating Profit – Interest 7. Net Income/ Profit/ Margin = Income before taxes- Taxes
  3. 3. Illustration of Income Statement
  4. 4. Earnings per Share (EPS)
  5. 5. 3. Retained Earnings Statement The statement that shows/reports how much of the firm’s earnings were retained in the business rather than paid out as dividends is called “Statement of Retained Earnings”. The figure for retained earnings that appears in this statement is the sum of the annual retained earnings for each year of the firm’s history.
  6. 6. Retained Earnings
  7. 7. Dividend The term dividend means distribution of cash by a corporation to its stockholders. The amount received by each stockholder is in proportion to the number of shares owned. Dividends are paid only through action by the board of directors.
  8. 8. Illustration Question The financial details of a company for the year 2011 are as follows. Net income (Million SAR) = 572 Preferred Stock Dividends (Million SAR) = 270 Common Stock Dividends (Million SAR) = 150 Number of shares of Outstanding Commons stocks= 1 Million Calculate the Retained Earnings and Earning Per Share. The financial details of a company for the year 2011 are as follows. Net income (Million SAR) = 572 Preferred Stock Dividends (Million SAR) = 270 Common Stock Dividends (Million SAR) = 150 Number of shares of Outstanding Commons stocks= 1 Million Calculate the Retained Earnings and Earning Per Share.
  9. 9. Answer to the Question Retained Earnings = (Net Income) – (Preferred & Common Stock Dividends) = 572 – (270 + 150) = 572 – 420 = SAR 152 Million EPS = Available Earnings to Common Stockholders Number of Shares of Common Stock Outstanding = 150 = SAR 150 1 Retained Earnings = (Net Income) – (Preferred & Common Stock Dividends) = 572 – (270 + 150) = 572 – 420 = SAR 152 Million EPS = Available Earnings to Common Stockholders Number of Shares of Common Stock Outstanding = 150 = SAR 150 1
  10. 10. Answer to the Question Retained Earnings = (Net Income) – (Preferred & Common Stock Dividends) = 572 – (270 + 150) = 572 – 420 = SAR 152 Million EPS = Available Earnings to Common Stockholders Number of Shares of Common Stock Outstanding = 150 = SAR 150 1 Retained Earnings = (Net Income) – (Preferred & Common Stock Dividends) = 572 – (270 + 150) = 572 – 420 = SAR 152 Million EPS = Available Earnings to Common Stockholders Number of Shares of Common Stock Outstanding = 150 = SAR 150 1

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