About the Income Statement Generator
This income statement generator turns a handful of revenue and expense figures into a formatted multi-step profit and loss (P&L) statement. Enter sales, returns, cost of goods sold, the main operating expense lines, other income, interest and your tax rate, and it lays out net revenue, gross profit, operating income (EBIT), EBITDA, pre-tax income, income tax and net income — each with its margin as a percentage of net revenue.
It suits small-business owners preparing figures for a lender or investor, freelancers reviewing a year, founders building a quick projection and accounting students checking homework. The table below the results can be copied straight into a report or spreadsheet.
Tax is applied as a flat rate to pre-tax profit and is zero when the business makes a loss; real tax bills depend on deductions, credits and loss carry-forwards. Depreciation and amortization are shown as an operating expense and added back to arrive at EBITDA.
With the default inputs, the net income is $87,690.00. Change any value above to recalculate instantly.
How to use the income statement generator
- 1Enter gross sales and any returns, allowances or discounts.
- 2Enter cost of goods sold for the same period.
- 3Fill in each operating expense line, including depreciation.
- 4Add other income, interest expense and your effective tax rate.
- 5Review the margins and copy the formatted statement from the table.
Formula and method
A multi-step income statement subtracts costs in stages. Net revenue is gross sales less returns, allowances and discounts. Deducting cost of goods sold gives gross profit; deducting operating expenses (including depreciation and amortization) gives operating income, also called EBIT. EBITDA adds depreciation and amortization back to EBIT.
Non-operating items — other income and interest expense — are then added or subtracted to reach income before tax. Tax is the pre-tax income multiplied by your rate when it is positive (zero for a loss), and net income is what remains. Every margin is the line divided by net revenue.
- COGS
- Cost of goods sold: direct cost of the products or services sold
- EBIT
- Earnings before interest and taxes (operating income)
- EBITDA
- EBIT plus depreciation and amortization
Worked examples
Small product business, one year
Net revenue is $850,000 − $15,000 = $835,000; less $410,000 COGS gives $425,000 gross profit (50.9%). Operating expenses of $305,000 leave $120,000 EBIT. Adding $3,000 other income and deducting $12,000 interest gives $111,000 pre-tax; 21% tax is $23,310, leaving $87,690 net income — a 10.5% net margin.
Service firm with no inventory
With no cost of sales, gross profit equals revenue. Operating expenses total $282,000, so EBIT is $118,000 (29.5%). Tax at 25% is $29,500, leaving $88,500.
Loss-making year
Gross profit is $120,000 but operating costs are $145,000, so EBIT is −$25,000. After $5,000 interest the pre-tax loss is $30,000; no tax is charged, so net income is −$30,000.
Frequently asked questions
What is the difference between a single-step and multi-step income statement?+
A single-step statement lists all revenues together and all expenses together and subtracts once. A multi-step statement, like this one, shows gross profit and operating income separately so readers can see margins at each level.
Is an income statement the same as a profit and loss statement?+
Yes. Income statement, profit and loss (P&L) statement and statement of operations all describe the same report of revenue, expenses and profit over a period such as a month, quarter or year.
Where does depreciation go on the income statement?+
Depreciation and amortization are usually operating expenses, either on their own line or within cost of sales and SG&A. They reduce EBIT but are non-cash, which is why EBITDA adds them back.
What is a good net profit margin?+
It varies widely: grocery retail often runs 1–3%, many service businesses 10–20% and software companies can exceed 20%. Compare your margin with businesses in the same industry and with your own past results.
Should owner salaries be included?+
For a company, salaries paid to owner-employees are an operating expense. For a sole proprietor, owner drawings are not expenses — they come out of equity — so leave them out of the P&L.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.