Preparing an Income Statement The companies net income is profitable when the sales exceed the cost of goods sold In this the gross profit is 761k This is beneficial to the company Though we took the cost of goods away from the net sales there are still other areas which need to take a piece of the pie For this company once the SG A and depreciation are taken out the company still contains a profit of 290k But the buck does not stop there Once the interest income and interest expense are adjusted the balance before earnings and taxes is 290k After taxes are taken out the company is left with a net profit of 174k In this case I think the company has achieved success with a net profit of 174k If the company were unable to be profitable the company would eventually go out of business We would be able to tell if the company was not profitable by looking at each section individually The cost of goods sold is what stands out for me If we pay more to make the product then we are actually selling it for there is no profit to be made So I think it should all start there
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