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Income Statement Equation

The single step income statement formula is:

Total Revenues - Total Expenses = Net Income

An income statement compares your small business revenue against expenses, revealing your net profit or loss. It's a powerful tool to gauge financial health and performance.

Subtract operating costs like salaries, rent, utilities from your revenue. If revenues exceed total expenses, congratulations! Your small business made a profit. However, if expenses surpassed income for the period, you operated at a loss.

This profitability calculation is invaluable for small business owners tracking efficiency and net income generation. It helps identify areas for cost-cutting and revenue growth.

Income statements provide a snapshot of your venture's performance. Generate them monthly, quarterly or annually to analyze trends compared to previous periods.

Monitoring your small business income statement formula regularly keeps you informed on profitability. Use this metric to make data-driven decisions for sustainable growth.

Total Revenues

Net Income

Total Expenses

Balance Sheet

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