Page 70 - Finance for Non-Financial Managers

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The Income

Statement: The

Flow of Progress

et’s go back for a moment to our football game analogy.
LYou’ll remember we identified the income statement as a
report that tallies the cumulative effect of all the income and
expense transactions that occurred between two balance sheet
dates. All those transactions typically are conducted with the
idea of producing a profit for the company. The income state-
ment shows the company’s success in achieving that objective.

They Say Timing Is Everything—And They’re Right!

The income statement is the report that most non-financial
managers readily recognize. They know it shows whether the
business made a profit for the month, the quarter, or the year. In
large companies and small ones, managers’ bonuses are often
based on profit results (too often, even though they have little
control over the profit—but that’s another subject). Others see it
as the report most valued by their CEOs, shareholders, bankers,
and government regulators. Some managers recognize it by its
format, but are used to calling it a different name, such as profit

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