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Foundations Of Financial Management
Found in: Page 48
Foundations Of Financial Management

Foundations Of Financial Management

Book edition 16th
Author(s) Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Pages 768 pages
ISBN 9781259277160

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Short Answer

Arrange the following income statement items so they are in the proper order of an income statement:

Taxes

Earning per share

Share Outstanding

Earning before taxes

Interest Expense

Cost of goods sold

Depreciation Expense

Earning after taxes

Preferred Stcok dividends

Earning available to common stockholders

Sales

Selling and administrative expense

Gross profit

The costs of goods sold are deducted from sales to derive the gross profits. The gross profits are further reduced by selling and administrative cost, interest expense, depreciation expense to derive the earnings before tax. The taxes are subtracted from the earnings before tax to derive the earnings after tax. The preferred stock dividends are further reduced to derive earnings available to common stockholders. The earnings of common stockholders are divided by shares outstanding to calculate the earnings per share.

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Step by Step Solution

Income statement

An income statement is a major component of the financial statement prepared by an organization to show its financial performance.

Arrangement of income item in proper order

S.no.

Particulars

1.

Sales

2.

Cost of goods sold

3.

Gross profit

4.

Selling and administrative cost

5.

Interest Expense

6.

Depreciation Expense

7.

Earning Before taxes

8.

Taxes

9.

Earning after taxes

10.

Preferred stock dividends

11.

Earning available to common stockholders

12.

Shares outstanding

13.

Earnings per shares

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