Income statement with excel

An income statement or profit and loss statement is an essential financial statement where the key value reported is known as Net Income. The statement summarizes a company’s revenues and business expenses to provide the big picture of the financial performance of a company over time. The income statement is typically used in combination with a balance sheet statement.

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There are many ways to format an income statement. The two examples provided in the template are meant mainly for small service-oriented businesses or retail companies. (1) The simplified «single-step» income statement groups all of the revenues and expenses, except the income tax expense. (2) The «multi-step» income statement example breaks out the Gross Profit and Operating Income as separate lines. It first calculates the Gross Profit by subtracting Cost of Goods Sold from Net Sales. It calculates the Operating Income and then adjusts for interest expense and income tax to give the Income from Continuing Operations.

If all of those terms are making you queasy, read below the download block for more information.

Description

This income statement template was designed for the small-business owner and contains two example income statements, each on a separate worksheet tab (see the screenshots). The first is a simple single-step income statement with all revenues and expenses lumped together.

The second worksheet, shown on the right, is a multi-step income statement that calculates Gross Profit and Operating Income.

Income Statement Essentials

Net Income = Total Revenue — Total Expenses

Revenues

The income that is generated by providing a service, selling a product, earning interest on investments, renting extra office space, licensing technologies, selling advertising space, or licensing the use of your brand name. In the income statement template, there are categories for Sales revenue, Service revenue, Interest revenue, and Other revenue. You will likely want to customize the Revenue section to highlight your company’s main sources of revenue.

Cost of Goods Sold (COGS)

For a retail company, one of the main expenses is the cost of goods sold. So, you’ll see Cost of Goods Sold broken out into its own section, with Gross Profit calculated as the Net Sales minus Cost of Goods Sold. Use the MultiStep worksheet in this case.

The cost of goods sold can be calculated by adding beginning inventory, goods purchased, raw materials and direct labor for goods manufactured, and then subtracting the ending inventory.

For service businesses, COGS might not be such a large factor, so that is why the SingleStep worksheet doesn’t have a separate COGS section.

Operating Expenses

This section is where you include all your operating expenses such as advertising, salaries, rent, utilities, insurance, legal fees, accounting fees, supplies, research and development costs, maintenance, etc. Don’t include interest expense and income taxes (they will be included later).

Operating Income (EBIT)

In the multi-step income statement, the operating income is calculated as the Gross Profit minus the total Operating Expenses. In general, interest expense and income tax expense are not included as operating expenses, which gives rise to the term EBIT or «earnings before interest and taxes» — another name for Operating Income.

Income from Continuing Operations

This is the «bottom line», calculated as the Operating Income minus interest expense and income tax (and plus/minus non-operating revenues, expenses, gains, and losses, if there are any). If there are no «below-the-line» items, then this is the same as the Net Income.

Below-the-line Items

Some forms of income, such as the sale of a building you are no longer going to be using, are included «below-the-line» (i.e. below the reported Net Income from Continuing Operations) because they may not be expected to occur in the future. These include the effect of accounting changes, income from discontinued operations, and extraordinary items (gaines or losses that are unusual or highly abnormal).

Income Statement References:

• Financial Accounting: Reporting and Analysis by M.A. Diamond, E. K. Slice, and J.D. Slice., 2000.
• Income Statement, Net Income or «Bottom Line» at wikipedia.org

Disclaimer: This spreadsheet and the information on this page is for illustrative and educational purposes only. We do not guarantee the results or the applicability to your financial situation. You should seek the advice of qualified professionals regarding financial decisions.

Businesses, both big and small, need to track their performance. This is why financial statements, such as the balance sheet and income statement, are useful.

To check your business’s performance, you don’t even need an accountant or accounting software. Excel can help you make your own statements if you follow the instructions.

To help you prepare your statements, here’s a guide on how to make an income statement.

What Is an Income Statement?

This document is pretty simple. All you need to remember is this formula:

 Net Income = (Total Revenue + Gains) - (Total Expenses + Losses) 

Once you’ve created your income statement, you’ll see how much you’ve made (or lost) in a period. You will also see the amount you’re making or spending per category.

This information will let you see your efficiency. The data will also tell you what aspects of your business needs improvement.

1. Choose Your Period

Most income statements are prepared annually. That way, you can see how you did your previous year and what you can improve.

However, you can create quarterly (or even monthly) income statements. This is particularly useful if your business is new or if you’re changing strategies. That’s because it allows you to see the overall impact of the changes you make.

2. Have Your Journal on Hand

Accurate record-keeping is necessary for any statement you make. That’s why businesses need to keep track of their financial transactions in a journal.

If you haven’t started a journal yet, you can create your income statement with your receipts, bank statements, and other records. As long as you have complete details, you can make a reasonably accurate income statement.

3. Arrange Your Information

Before moving forward with creating the income statement, you should arrange them first. This document has four primary categories:

• Revenue/Profit Section: refer to money made and spent under your company’s primary purpose.
• Operating Expenses: refers to your company’s day-to-day expenses. These are your required expenditures to run your business.
• Gains (Losses) from Continuing Operations: refers to your interest expense, taxes, and other cash movements unrelated to operations.
• Non-recurring Events: refers to significant, non-recurring gains and losses. These could be the sale or purchase of significant assets, income from discontinued operations, accounting considerations, and other items.

Find which section each transaction falls in so it will be easier to fill out your Excel file later.

4. Make the Excel File

1. To make your Income Statement, first, open up Microsoft Excel, then create a new file.
   
2. In the first cell, type in [Company Name] Income Statement. This helps you organize your files, especially if you need to print this document.
3. Skip one row and then write Covered Period. This shows what dates are covered by this income statement.

5. Find Your Subcategories

The four categories provided remain the same across most companies. However, the sections under here will change from business to business.

To help you choose which section to place, here are some examples:

1. Revenue

• Sales
  • Gross Sales
  • Bad Merchandise
  • Net Sales
• Cost of Goods Sold: this refers to your capital for your inventory. This is only applicable if your business deals with physical items. If you’re a service-based business, you can skip this section.
• Beginning inventory
• Purchased goods
• Raw materials
• Manufacturing labor
• Total Goods Available
• Ending Inventory
• Total Cost of Goods Sold
• Gross Profit (Loss)

2. Operating Expenses

• Salaries
• Rent
• Utilities
• Transportation
• Advertising
• Marketing
• Others
• Total Operating Expenses

• Operating Income (Loss)

3. Gains (Losses) From Continuing Operations

• Other Gains
  • Other Expenses
  • Interest Expenses
• Total Gains (Losses) from Continuing Operations
• Income Before Taxes
  • Tax Expenses
• Income (Loss) from Continuing Operations

4. Non-Recurring Events

• Income from discontinued operations
  • Losses from discontinued operations
• Gains from extraordinary items
  • Losses from extraordinary items
• Gains from accounting changes
  • Losses from accounting changes
• Total Gains (Losses) from Non-recurring Events

• Net Income

These categories are what most businesses use for their income statement. However, feel free to change this as you see fit.

Always add spaces between categories and subcategory sections. This ensures that you won’t get confused with tightly packed information.

Indent each subsection to help differentiate it from other sections. In the Home ribbon, you can find the Indent button under Alignment.

You can also resize the columns to ensure that all contents fit. Do that by double-clicking on the line between columns A and B.

6. Prepare Your Formulas

Formulas in your income statement are simple. After all, it’s just a matter of adding or subtracting values.

However, all values are connected, so you should be careful when writing your formulas. First, prepare the formula for Net Sales. All you need is to find the sum of the entries here.

To do that, type =SUM( and then select all entries under the Sales subsection. Don’t forget to hold the Shift key to select multiple cells.

The Cost of Goods Sold section has two subtotals. The first one is Total Goods Available. This is the sum of all your current inventory. To find this value, repeat the formula above and select all entries above Total Goods Available.

The Total Cost of Goods Sold is the sum of Total Goods Available and Less: Ending Inventory. Its formula is =SUM([Total Goods Available]:[Less:Ending Inventory])

Once you have that value, compute your gross profit using this formula: =[Net Sales]-[Total Cost of Goods Sold]

The formula for total operating expenses is like the one used in net sales. Use =SUM( then select all cells under this subcategory.

To compute your operating income (loss), use the formula =[Gross Profit (Loss)]-[Total Operating Expenses].

Compute your total gains (losses) from continuing operations by using the sum function. Then once you have that amount, find your income before taxes with this formula: =[Operating Income (Loss)]+[Total Gains (Losses)].

To get your income from continuing operations, add your income before taxes, less: tax expenses value, and operating income.

You then need to find the total gains/losses from non-recurring events. Use the SUM function to do this.

To calculate net profit, add the income from continuing operations and nonrecurring gains or losses.

7. Format Your Document

To make your document easier to read, format it so that negative numbers appear red. Do this so that you can quickly analyze your statement with just a glance.

To do that, select all your data. Then, look for the dropdown menu in the Number section at the Home ribbon.

1. Choose More number formats…
2. You will see a new window titled Format Cells. Look for the Number tab at the top row.
3. Click on it, then, under the Category subwindow, choose Currency.
4. Find the correct Symbol that represents your currency accurately.
5. Afterward, under the Negative numbers: subwindow, select the -$1234.10 with a red font color option.

You should then see all negative values in your data, making it easier to find and see.

Also, select each category, subtotal, and total row and assign different colors. This makes it easier to read and gives your income statement a professional look.

8. Place Your Values

Once you’ve prepared everything, place all the actual values that you’ve prepared. All amounts you enter should be positive unless it’s for a row that’s marked Less:

You can access and save a copy of this income statement sample here.

See How Your Business Performed

Now that you know where you make money and where your expenses are, you can see if you are hitting your goals. Using this document, you can see how efficiently you run your business.

You can also compare this document between two periods. It’s especially helpful if you’re making strategic changes. You’ll see if the changes you made are effective or not.

If there is one report that’s a business constant, it’s the income statement (also known as a profit and loss statement). Its core purpose is to show managers and investors the bottom line of a company for a specific period. It is normally delivered as a structured spreadsheet that shows how the top line (revenues) is transformed into the bottom line after taking out expenses.

There is a much better way, however. An income statement tells a very important story about your company and you can tell it in a much more effective way. Instead of relying on just numbers, you can use visual language that makes your story not just much more attractive but also much easier to understand.

A Basic Income Statement

First, let’s take a look at a relatively simple income statement showing business results for two years.

Tip: There are many things you can do to improve the readability of your report. Some are more subtle than others — for example, in the structure waterfall chart, the numbers that have positive contribution are displayed to the right of the bar, while negative contribution values are marked on the left. This is a good practice that clarifies your story without any added visual noise.

The first and second columns of the waterfall charts show the different types of revenue and costs that make up total profit across two different years. The first section of the chart shows revenue sources and growth that contribute to the overall profit, followed by costs, such as product, service, and other operating expenses that reduce the overall profit. Note the «Operating income» which is a subtotal of all other expenses above it. This intermediate calculation improves readability and helps visualize the end result. These subtotals are actually very easy to do in Zebra BI for Office. You only need to right-click on the selected row and select the option ‘Result’ and Zebra BI will do the rest.

When you create a report like this, you use the «structure» waterfall chart. This type of waterfall chart shows the structure of the final profit and contributions of individual items. You could also use the «Variance» chart that puts the focus on actual differences.

The two waterfall charts are complemented by a variance bar chart and a lollipop chart on the right:

The bar chart displays absolute values and their change. The lollipop chart represents relative growth or decrease in percentages. The important thing about the variance chart is that it is scaled. The length of the chart now corresponds to the actual difference between 2020 and 2021 values.

Tip: Use a waterfall chart instead of a bar chart to display absolute variance. You will be able to visualize not only the values but also how they contribute to the total difference. Like this:

When working with comparisons, you will soon meet the Zebra BI custom calculations. Instead of using negative or positive numbers, you can use the custom calculation Invert to define whether an item is a positive or negative addition to the total. Using this feature you can easily invert KPIs that have a negative contribution despite being a positive value. Simply right-click on the selected KPI and choose Invert. For example, an increase in the cost of research and development is a positive value with a negative impact on your overall profit. Zebra BI will show it in red, despite it being a positive value.

Taking It Up a Notch

In real life, you might want to show data for more than just two years. A typical scenario is a report with the current and past year’s data and plans for the coming year.

Notice a different approach to designing the report. With three data sets, we are coming up short on space. Since the variance data is much more relevant, we used a table and chart combination. The PY, AC and BU values are displayed in a table, while the more important variance data is visualized with charts.

The bar and a lollipop charts are telling the same story as with the previous template. However, we now have two pairs of them — one pair for showing variance from the past year and the second pair displaying the difference compared to the plan.

The great thing about Zebra BI is that you have complete design freedom. For example, you could change the order of charts or even place data columns between charts.

Tip: When designing a more complex template like this, decide on an order of charts and stick to it. I prefer showing the variance compared to the previous year and then the comparison to the plan. You might want to use a different approach, just make sure to stay consistent. This way, you’ll ensure your income statement always tells a clear story at first glance.

When designing a report like this, make sure that all the charts that visualize the same type of data are scaled. You can see here that bar lengths clearly display the difference between the previous year and the plan. Keep in mind that this type of report is fairly useless if it’s not scaled. Luckily, scaling is one of the strong points of Zebra BI as it happens automatically.

The more the merrier

These two sample income statements were for a single company. But what about if we are create an income statement for a group of companies, subsidiaries, or profit centers? In this case, you might want to show multiple countries or companies on a single page. Take a look at an example:

This table contains multiple levels of data — you can see the performance of key metrics for three different countries within one visual. The actual value is represented with a waterfall chart and it shows clearly the net sales, costs, operating profit, EBITDA, and net result. On the right are variance charts showing differences compared to the plan. This is a great way to show the picture of your business on a single page.

Tip: When designing visual reports like this, pay attention to labeling and headings. Clear and understandable headings help you tell the story while comments help you draw attention to significant data points.

All these visualizations comply with the IBCS standards, which ensures that you can easily read this page without losing sight of the overall picture.

Want to create income statements like these?

If you’d like to create the income statements that you see in this article, you can download our free templates:

An income statement is an essential tool for analyzing financial data.

It is one of the documents that you can use to make informed financial decisions. The income statement template in Excel enables you to create one for your financial data.

This blog will discuss how to create an income statement and analyze the data in Excel.

Table of Content:

1. What is an Income Statement?
2. Types of Income Statements
3. Purpose of Using an Income Statement
4. Best Graphs to Visualize Income Statement
5. How to Analyze Financial Data from Income Statements in Excel?
6. Benefits of Using an Income Statement
7. Importance of an Income Statement Template in Financial Analysis
8. Wrap Up

What is an Income Statement?

An income statement is a financial statement that allows you to analyze your financial data systematically. It contains information about the company’s revenues, expenses, net income, and other key financial indicators.

You can use it to analyze data for a specific period, such as a month, quarter, or year. You can also track your income and expenses and make better financial management decisions.

Businesses and individuals use the income statement to prepare their financial statements. Banks and other financial institutions use it to assess the financial position of their customers. In addition, investors use it to assess the performance of their investments.

Types of Income Statements

• Classified Income Statement

The classified income statement separates the company’s income and expenses into different categories. It allows for a detailed analysis of the company’s performance.

The categories may include operating income, non-operating income, cost of goods sold, operating expenses, and non-operating expenses.

• Comparative Income Statement

The comparative income statement shows the company’s income and expenses over two periods. It enables you to compare the company’s performance over time.

• Condensed Income Statement

The condensed income statement is a simplified version of the classified income statement. It shows the company’s total revenue and expenses without breaking them down.

• Cash Basis Income Statement

The cash basis income statement shows cash transactions. It does not include any non-cash transactions such as depreciation or amortization.

• Partial Income Statement

The partial income statement shows certain categories of income and expenses, such as revenues, expenses, and net income. It is used for smaller companies or companies with limited business activity.

Purpose of Using an Income Statement

• Convey Profitability

The income statement shows how much money the business has made or lost. Stakeholders can understand how the company is performing by looking at the income statement. It can help identify areas where you can cut costs or increase revenue. Thus, the business can become more profitable and lead to long-term success.

• Decision Making

You can use it to make informed decisions about a business’s operations. For example, if you identify that expenses are higher than revenue. You can look at the income statement to identify where you can make cuts.

• Financial Strategizing

You can use it to plan for the future and set yourself up for long-term success. By looking at the income statement, you can identify areas where you can focus your efforts. For example, you can see that the revenues are lower than the expenses.

Thus, focus on increasing the revenue. You may focus on marketing efforts, expanding the product line, or targeting a new market.

• Financial Performance Comparison

You can use an income statement to compare a company’s financial performance from different periods. This comparison can help you to identify areas of strength and weakness and inform future strategies.

Best Graphs to Visualize Income Statement

• Sankey Chart

The Sankey Chart displays the flow of income from one source to another. It is a great way to visualize a company’s or individual’s income and expenses. The Sankey Chart also helps identify trends and patterns in financial data.

You can use a Sankey Chart as an income statement projection template.

Example 1: Company Income Statement Template

• For example, you have financial data and want to observe how money is moving.

• Here is a Sankey Chart for the following company financial data.

Example 2: Personal Income Statement Template

• You can use a Sankey Chart to determine whether you are using your finances on relevant items.

• Clustered Bar Chart

A Clustered Bar Chart is a great way to compare different income statement items. It enables you to see how much money you are making or losing. It is a perfect comparison graph for identifying strengths and weaknesses.

Example

• The visualization will look like as follows:

• Sentiment Trend Chart

A Sentiment Trend Chart visualizes changes in income statement items over time. You can see how revenue, expenses, or net income changes have impacted the business.

• Multi-Axis Line Chart

A Multi-Axis Line Chart displays multiple lines with two or more axes. It is useful for visualizing complex data sets with multiple dimensions or variables. You can use it to compare the profitability between periods.

Example

• Waterfall Chart

A Waterfall Chart shows the cumulative impact of changes in finances. You can pinpoint sections of the company where you can reduce expenditures and increase income.

Example

How to Analyze Financial Data from Income Statements in Excel?

Analyzing financial data from an income statement is a straightforward process. First, enter your income and expenses into the income statement template.

You can enter data from other financial statements, such as the balance sheet and cash flow statement.

Once you have entered your data into the template, you can begin to analyze it. You can track changes in your finances over time and project future income and expenses.

ChartExpo enables you to create a perfect income statement using the appropriate graphs. You can also use the template to identify areas for improvement.

Furthermore, it can also help you understand the financial impact of your income and expenses changes.

How to Install ChartExpo in Excel?

1. Open your Excel application.
2. Open the worksheet and click on the “Insert” menu.
3. You’ll see the “My Apps”.
4. In the office Add-ins window, click on “Store” and search for ChartExpo on my Apps Store.
5. Click on “Add” button to install ChartExpo in your Excel.

ChartExpo charts and graphs are available both in Google Sheets and Microsoft Excel. Please use the following CTA’s to install the tool of your choice and create beautiful visualizations in a few clicks in your favorite tool.

Example

Let’s generate an income statement using the data below.

• To get started with ChartExpo, install ChartExpo in Excel.
• Now, click on My Apps from the INSERT menu.

• Choose ChartExpo from My Apps, then click Insert.

• Once ChartExpo is loaded. Click on “Sankey Chart” from the list of charts.

• Click “Create Chart From Selection” button after selecting the data from the sheet, as shown.

• The Sankey Chart will look like as follows.

• If you want to have the title of chart, click on Edit Chart, as shown in the above image.
• To change the title of the chart, click on the pencil icon that is available very next to Chart Header.
• It will open the properties dialog. Under the Text section, you can add a heading in Line 1 and enable the Show Give the appropriate title of your chart and click on Apply button.

• Let’s add the Prefix (e.g. $ Sign) with the numeric values in the chart.
• Click on the highlighted pencil icon. Expand the “Symbols” properties to add the Prefix value (e.g. $ sign).

• To change the node color, click on the pencil icon available with the node. Expand the Node properties and change color from the Node Color property. Click on the Apply button.
• For saving changes click on Save Changes. This will persist the changes.

• Final chart will look like as follow.

Insights

• Domestic sales accounted for most of the company’s income, which amounted to $3.22 million. Pacific sales were the least contributor in income, contributing $84.98 thousand. The total income of the company was $5.78 million. It was divided into separate categories: taxes, savings, and salaries.
• Salaries consumed the largest portion of the income, totaling approximately $1.48 million.
• Of the savings, they stored $1.93 million in stocks, and they invested $263.98 thousand in bonds. The remaining $689.53 thousand was held in cash.
• They spent $1.29 million on taxes. They designated $295.07 thousand to state taxes, and allocated $991.94 thousand to federal taxes.

Benefits of Using an Income Statement

• Shows the Effectiveness of Financial Strategies

An income statement reveals the effectiveness of the company’s financial strategies. It helps the stakeholders to understand the financial performance of strategies used and make informed decisions.

• Provides Detailed Financial Information

An income statement provides detailed financial information about the company. It includes information about the company’s revenue, expenses, profits, and losses. It also conveys information about assets and liabilities.

• Eases Financial Communication to Stakeholders

The income statement helps to ease communication with stakeholders. It provides detailed information about the company’s financial performance. This helps the stakeholders to understand the financial position of the company.

•  Provides Lending Institutions with an Unbiased View of the Company’s Financial Health

It provides detailed information that helps lending institutions evaluate the company’s financial position. This helps them decide whether to lend money to the company or not.

Importance of an Income Statement Template in Financial Analysis

• It helps you track your income and expenses, plan for the future, and make better decisions.
• You can use it to analyze changes in your income and expenses over time. This analysis can help you understand the financial impact of these changes. Thus you can make better decisions about how to manage your finances.
• It helps with preparing financial statements and assessing your financial performance.
• It helps track a company’s or individual’s profitability over a certain period. It also helps to identify areas of improvement or areas of concern in terms of profitability.
• It is used to assess the ability of a company or individual to pay back a loan. It also helps to assess the creditworthiness of a customer.

FAQs:

What is an income statement?

An income statement is a financial statement that records and analyzes the revenue and expenses of the company. It helps with measuring the financial performance of a business. It also helps the stakeholders to make informed decisions.

Does Excel have an income statement template?

Yes, Excel does have an income statement template. The template is designed to provide an easy-to-use format for creating an income statement. It can be customized to fit the specific needs of the user.

What is the template of the income statement?

An income statement template is a spreadsheet that allows you to visualize your income and expenses. You can use it to analyze your financial data in a systematic and organized way.

What is the purpose of using an income statement?

The primary purpose of an income statement is to provide an overview of a company’s financial health. It allows you to see how much the business has earned or lost over a period. In addition, it helps you assess whether the company is making a profit.

Wrap Up

An income statement is an essential part of a business’s financial statement. It provides detailed information about the company’s revenue, expenses, profits, and losses. Using an income statement template in Excel can help you track your income and expenses. Thus, it is an important tool for analyzing financial data.

Using an Excel income statement template, you can quickly analyze your financial data. You can also use it to make better decisions about the company’s future performance. Furthermore, you can gain insights into the profitability of your business and develop strategies for long-term success.

Are you looking for an easy and efficient way to analyze your financial data? An income statement template in Excel is the perfect solution. So, what are you waiting for? Get started today with ChartExpo.