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Running Head: Income Statement Ford Motor Company 1

The document discusses the key components and purpose of an income statement. It explains that an income statement contains revenue, expenses, and the bottom line to communicate a company's financial performance over a period of time. The main sections include revenue, cost of goods sold, gross profit, operating profit, and net profit. Investors use the income statement to evaluate management's effectiveness in controlling costs and generating revenue and earnings.

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Moses Macharia
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46 views

Running Head: Income Statement Ford Motor Company 1

The document discusses the key components and purpose of an income statement. It explains that an income statement contains revenue, expenses, and the bottom line to communicate a company's financial performance over a period of time. The main sections include revenue, cost of goods sold, gross profit, operating profit, and net profit. Investors use the income statement to evaluate management's effectiveness in controlling costs and generating revenue and earnings.

Uploaded by

Moses Macharia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Running head: INCOME STATEMENT FORD MOTOR COMPANY 1

Income Statement- Ford Motor Company

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INCOME STATEMENT -FORD MOTOR COMPANY 2

Income Statement

Income statement or Profit or loss account is one of the major financial statement. The

income statement is used to record financial performance over particular period of time, it

contains, the revenue, and expenses. The purpose of the income statement is to communicate the

company performance in term of revenue and bottom line to the shareholders and potential

investors. The investor uses the income statement to determine the effectiveness of the

management to control expenses and generate revenue and earnings for the shareholder. The

company can file income statement weekly, monthly quarterly, and annually.

The income statement is used to show whether the company made profit or loss; in

addition, the income statement is used to gauge the effectiveness of the management to manage

expenses in order to generate revenue and earnings to the shareholders. Together with the

balance sheet the information in the income statement is used to calculate the financial that

indicate whether the company is financially health or not. The main parts of the income

statements include, revenue, the gross profit, the operating profits and the bottom line.

The revenue section shows how much of the revenue the company managed to generate

in specific period. The revenue section is important since it indicate how much revenue was

generated from the sales of products or services.

The second section of the income statement is cost of goods sold; this section outlines all

the expenses that were incurred to make sales. The section may include the cost of purchasing

the goods or the cost of production. The cost of goods includes, cost of material, the cost of

labor, and allocated overhead. If the cost of gold sold comprise the purchase price; the cost of

fright and insurance will be included.


INCOME STATEMENT -FORD MOTOR COMPANY 3

When cost of gold sold is subtracted from revenue it gives the gross profit. The gross

profit is important since it indicate whether the revenue is enough to cover other cost part from

the cost of good sold. In addition, the gross profit is used to calculate the gross profit margin that

helps the investor to how much the company left after the variable and fixed cost of production.

The operating profit or Earning Before Interest and Taxes is the third section of the

income statement. To get the operating profit, the operating expense is subtracted from the gross

profit. The operating profit indicates the effectiveness of the management in managing the

operating expenses.

The last section of the income statement is the bottom line or the net profit. The section

indicates whether the company made loss or profit

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