The Handbook of Financial Modeling: A Practical Approach to Creating and Implementing Valuation Projection Models

Modeling Glossary and Terminology

Income statement terms

The following is a list of terms and their definitions that are used in income statements.

Term	Detail
Cost of goods sold	For a retail or wholesale business, it is the total price paid for the products sold plus the cost of having them delivered to the store during the accounting period. For a manufacturing firm, it is the beginning inventory plus purchases, delivery costs, material, labor, and overhead minus the ending inventory.
Gross profit	This is the amount before operating expenses and federal taxes have been deducted.
Income before taxes	This is the operating income plus other incomes.
Net income	Before taxes minus income taxes—this is what the business earned during the period. It is added ...