Income Statement Template

Publication Date :

03 Apr, 2019

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Table Of Contents

What Is An Income Statement Excel Template

An income statement excel template reports a company's income and expenses and thus derives its profit generated for a specific period (generally for a financial year). It is the format of one of the three financial statements used to interpret an entity's financial results.

The excel template of an income statement is to be used for understanding how to calculate Net Profit from Gross Sales reported by a company. This Net Profit is important for all company's reporting purposes, and this profit is used for further allocation of next year's provisions and reserves and payment of dividends to shareholders.

What Is An Income Statement Excel Template

Income Statement Template Explained

The success of an income statement depends on accurately reported statistics. However, it also depends on the correct format the company uses to write the numbers. There are different income statement templates in excel approved by different financial reporting institutions globally, and companies generally follow a particular institution (like US GAAP or IFRS for US entities or IAS for Indian companies). However, the same data can be reported interchangeably in other formats with the same output. Using the income statement excel template, one can derive the actual profit made by the company for the year and accordingly make decisions for future investments and provisions. Any update on the projected income statement excel template should be incorporated to create the next version of this template.

Video Explanation of Income Statement

Format

Given below is the format for the yearly or monthly income statement excel template.

Gross Revenue: This is the earnings from the company's Gross Sales. All expenses related to the sales are deducted after this starting point in the income statement.
Cost of Goods Sold: All direct expenses in the manufacturing or development of a product are accounted for under this header.
Gross Profit: Profit derived by deducting the Cost of Goods Sold from Gross Revenue;
Operating Expenses: These operating expenses relate to indirect costs of the company’s product, which is being sold and whose revenue is generated as a part of the Gross Revenue.
Operating Profit: Income derived after deducting Cost of Goods Sold and Operating Expenses from Gross Revenue.
Amortization Expenses: This is the average amount of any Capex carried out during the year based on the improvement's useful life. E.g., replacing the roof of the property is a capital expense, and the company may not want it to be reflected in the same year. Moreover, the use of such improvement is being made over a period, which is also called the useful life of such a new roof. Hence such a huge amount is divided into the same smaller amounts, which can be reflected in the income statement yearly.
Depreciation: Depreciation is an expense that is treated similarly to amortized. A fixed asset tends to deteriorate in value each year. Such a deteriorated amount is being accounted for in the income statement each year.
Interest Expenses: Any interest expense a company makes during the year for loans and advances.
Tax: Commercial and industry-specific Taxes paid to the government (generally at 40%).
Net Profit: This is the actual profit made by the company after all expense deductions.

The above format is is a standard one for any projected income statement excel template.

Formula

Below is the calculation of each attribution of the income statement template in excel.

#1 - Gross Revenue (A):

Sales made by the company. It is the starting point of the income statement template.

#2 - Cost of Goods Sold (B):

Direct Costs associated with the manufacture/development of the product;
Formula: (B) = Opening Stock (B1) + Direct Costs (B2) + WIP (B3) – Closing Stock (B4)

#3 - Gross Profit (C):

Formula: (C) = Gross Revenue (A) – Cost of Goods Sold (B)

#4 - Operating Expenses (D):

All indirect expenses related to the product(s)' manufacture/development. It may be allocated to more than one product sold by the company depending upon the proportion of usage.
Formula: (D) = Total Administrative Expenses (D1) + Total Selling Expenses (D2) + Other Indirect Expenses (D3)* Other Indirect Expenses can be elaborated further into sub-items depending upon items and reporting structure. These include Office Rent, Supervisor Salary, etc.

#5 - Net Operating Profit (E):

Also called EBITDA (Earnings before Amortization, Depreciation, Interest, and Taxes)
Formula: (E) = (C) – (D)

#6 - Earnings before Interest and Taxes or EBIT (F):

All Amortized and Depreciation expenses required to be reported by the company are deducted from Operating Profit (or EBITDA).
Formula: (F) = (E) – Amortized Expenses – Depreciation Expenses

#7 - Earnings before Taxes or Profit before Taxes or EBT (G):

All Interest expenses required to be reported by the company are deducted from EBIT.
Formula: (G) = (F) – Interest Expenses
It is an important component of the income statement since, in the above calculation (EBT), the company's internal expenses are being reported that are related to the product and its manufacture/development. Hence, profit before taxes gives actual profit from income and expenses.

#8 - Profit After Taxes or PAT (H):

It is the Net Profit derived after deducting Taxes from EBT.
Formula: (H) = (G) – Commercial Taxes
All companies are required to pay a certain % of income to the government in the form of Taxes. Hence this amount to be paid is added to all other expenses.

The amount derived after calculating PAT or Net Profit is used to allocate profits to reserves, dividend payouts, and other provisions for the following year. The above calculations show the yearly or monthly income statement excel template.

Example

Every business owner knows very well that it is important to keep track of business transactions so that the process is transparent and easily manageable. So, there are many websites that offer templates for making the income statement which makes the process easy. Some of them are freshbooks.com, wise.com, etc. They offer customised simple income statement template excel to review performance of business.

Relevance And Uses

Important financial statement: The income statement is one of the most important financial statements and reports income generated by the company vis-à-vis the expenses incurred in making such revenue;
Analysis of performance by the company: A simple income statement template excel reflects the total expenses made and income made at each level accordingly. Such income at different levels is also used to analyze various company performance factors.
Future predictions: With all data correctly and accurately reported by the company, it can make its decisions for future projects.
Market Research: Such income statements reported by companies are also used by research analysts for making industry-level and sector-level reports, which industry experts further use. This type of research helps to make development decisions as well.