Income Statement
What does it mean
An income statement, also known as a profit and loss statement, is a financial report that outlines a company's revenues, expenses, and profits over a specific period. It showcases the business's ability to generate income, manage costs, and ultimately achieve profitability.
A income statement typically follows the following format:
Revenue
(=) Gross Profit
(+/-) Other Income/Expenses
(=) Net income
Why does it matter
For a banker, scrutinizing income statements is vital in evaluating a borrower's financial performance, understanding their revenue streams, and assessing the sustainability of their operations. This analysis helps bankers gauge the borrower's capacity to service debts, make informed lending decisions, and manage potential risks associated with the business's financial position.
Other Relevant Terms
Want to Master Banking's Favorite Ratio?
The Debt Service Coverage Ratio (DSCR) is one of banking's favorite ratios. Want to ace it without breaking a sweat? No problem! We've got some simple, no-fuss pointers that will help you nail this ratio every time. You've got this!
Get the Cheatsheet NowNot Finding What You Are Looking For?
Let me know what terms, ratios or content you want to see covered.
Request Term or Ratio
Am I missing a key term or ratio? Let me know what you want to see covered.
Request Content
Do you have a topic idea you'd like to see covered? Send it my way.
Checkout Courses
Enhance your skills through a deeper understanding of your customers' businesses.
A bit about me
Greetings! I'm Clay Sharkey, and there is nothing I like more than assisting others in achieving their goals. I firmly believe that by enhancing a banker's understanding of their customer's' business, they can provide superior service. This superior service, in turn, leads to stronger relationships for the bank, improved performance for the businesses, and better experiences for our communities. Win-win-win.
