Preparing An Income Statement Essay

263 words - 2 pages

Preparing an Income Statement

In constructing this muli-step income statement there was only one year available of information so it was hard to compare it to a previous year and see it the numbers have decreased or increased. The information presented on an income statement are not complete and sufficient barometers of financial performance. The income statement is one of many pieces of ...view middle of the document...

The cost of goods sold percentage for Coyote Inc is 58.5 percent. I was not able to see a previous year but this is important to know because cost of goods sold is the largest expense item for many firms. The gross profit margin figure indicates how much profit the firm is generating after deducting the cost of products or services sold and in this case it’s 41.5 percent. The operating profit measures the overall performance of the company’s operations and in this case it’s 16 percent. The net earnings or the bottom line represents the firm’s profit after consideration of all revenue and expenses reported during an accounting period in this case the net profit margin shows the percentage of profit earned on every sales dollar which is 9 percent.

References

Understanding Financial Statements. Eight Edition by Lyn M. Fraser and Aileen
Ormiston. Published by Prentice Hall 2007.

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