Income Statement

Summarizes an entire periods income-generating activity

Month,

quarter or year

Revenues and Expenses

Revenues

GAAP Rule: The Matching Principle

Match

Expenses = Net Income

revenues with the expenses that generated them

GAAP Rule: Revenue Recognition

Cash

basis versus Accrual basis

Sample Income
Statement
Good Form:
Company Name
Statement Name
Time Period

Bobbis Bakery
Income Statement
For the year ending December 31, 2015
Bakery Sales
Less: Sales Discounts

500

Net Sales

$61,500

Cost of Goods Sold

Ingredients

12,300

Wages to Bakers

16,000

Bakery Overhead

Everything is
subtracted to arrive
at subtotals:
Gross Margin
Operating Income
Net Income

$62,000

4,225

Less: Total Cost of Goods Sold

32,525

Gross Margin

$28,975

Selling & Administrative Expenses

Wages to Cashier

4,115

Marketing Materials

1,500

Less: Total Selling & Admin. Expenses

5,615

Operating Income

23,360

Less: Income Taxes

3,504

Net Income

19,856

Sample Income
Statement

Bobbis Bakery
Income Statement
For the year ending December 31, 2015
Bakery Sales
Less: Sales Discounts

All Sales are listed first;

Net Sales
if there are returns or
Cost of Goods Sold
discounts they are subtracted
Ingredients
to get net sales

Wages to Bakers
Cost of Goods sold
Bakery Overhead
is made up of the
Less: Total Cost of Goods Sold
materials, labor
and other expenses called Gross Margin
overhead that go into
Selling & Administrative Expenses
making the product or
Wages to Cashier
service
Marketing Materials

Less: Total Selling & Admin. Expenses

$62,000
500
$61,500
12,300
16,000
4,225
32,525
$28,975
4,115
1,500
5,615

Operating Income

23,360

Less: Income Taxes

3,504

Net Income

19,856

Sample Income
Statement

Bobbis Bakery
Income Statement
For the year ending December 31, 2015
Bakery Sales
Less: Sales Discounts

$62,000
500

Net Sales

$61,500

Cost of Goods Sold

Ingredients

12,300

Wages to Bakers

16,000

Bakery Overhead

Gross Margin:
The difference
Between Sales and CGS

4,225

Less: Total Cost of Goods Sold

32,525

Gross Margin

$28,975

Selling & Administrative Expenses

Selling & Administrative Exp.: Wages to Cashier

Not part of our product costs, Marketing Materials
but necessary to our business Less: Total Selling & Admin. Expenses

4,115
1,500
5,615

Operating Income

23,360

Less: Income Taxes

3,504

Net Income

19,856

Sample Income
Statement

Bobbis Bakery
Income Statement
For the year ending December 31, 2015
Bakery Sales
Less: Sales Discounts

$62,000
500

Net Sales

$61,500

Cost of Goods Sold

Ingredients

12,300

Wages to Bakers

16,000

Bakery Overhead

4,225

Less: Total Cost of Goods Sold

32,525

Gross Margin

Operating Income:
What did we make or lose
from our business?

$28,975

Selling & Administrative Expenses

Wages to Cashier

4,115

Marketing Materials

1,500

Less: Total Selling & Admin. Expenses

Net Income:
After we pay the last bill, our Operating Income
taxes, what remains to take outLess: Income Taxes
or put back into our business
Net Income

5,615
23,360
3,504
19,856

Sample
Income
Statement

Bobbis Bakery
Income Statement
For the year ending December 31, 2015
Bakery Sales
Less: Sales Discounts

$62,000

$61,500
$61,500

500

Net Sales

$61,500

100%

Cost of Goods Sold

Ingredients

12,300

Wages to Bakers

16,000

Bakery Overhead

4,225

Less: Total Cost of Goods Sold

Gross Margin

32,525

52.9%

$28,975

47.1%

Selling & Administrative Expenses

Wages to Cashier

4,115

Marketing Materials

1,500

Less: Total Selling & Admin. Exp.

5,615

Operating Income

23,360

Less: Income Taxes

3,504

Net Income

19,856

$32,525
$61,500
$28,975
$61,500
OR
100% - 52.9%

38.0%

$23,360
$61,500

32.3%

$19,856
$61,500

THE COCA-COLA COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,

2014

2013

2012

$ 45,998
17,889

$ 46,854
18,421

$ 48,017
19,053

GROSS PROFIT
Selling, general and administrative expenses
Other operating charges

28,109
17,218
1,183

28,433
17,310
895

28,964
17,738
447

OPERATING INCOME
Interest income
Interest expense
Equity income (loss) net
Other income (loss) net

9,708
594
483
769
(1,263)

10,228
534
463
602
576

10,779
471
397
819
137

INCOME BEFORE INCOME TAXES

Income taxes

9,325
2,201

11,477
2,851

11,809
2,723

CONSOLIDATED NET INCOME

Less: Net income attributable to noncontrolling interests

7,124
26

8,626
42

9,086
67

(In millions except per share data)

NET OPERATING REVENUES

Cost of goods sold

NET INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY

7,098

8,584

9,019

BASIC NET INCOME PER SHARE1

1.62

1.94

2.00

DILUTED NET INCOME PER SHARE1

1.60

1.90

1.97

AVERAGE SHARES OUTSTANDING

Effect of dilutive securities

4,387
63

4,434
75

4,504
80

AVERAGE SHARES OUTSTANDING ASSUMING DILUTION

4,450

4,509

4,584

Calculated based on net income attributable to shareowners of The Coca-Cola Company.

Refer to Notes to Consolidated Financial Statements.

73