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how to read an income statement the income statement shows a companys revenue expenses and profits over a period of time its also called a profit and loss statement or p l the top of the income statement is revenue which is the net dollar value of all products and services sold during the period from there we subtract the cost to produce the product or service which is called cost of goods sold what were left with is called gross profit but were not done subtracting expenses from there we subtract all of the overhead costs necessary to operate the business which could include research and development sales and marketing general administrative and more after subtracting those costs were left with operating income which is also called earnings before interest and taxes or ebit we then subtract the interest that was paid on any of the companys debt which gives us earnings before taxes or ebt finally we subtract any income taxes that were paid which gi
