The Income Statement (aka “Profit and Loss Statement”) goes on to show “General and Administrative Expenses,” sometimes called “overhead.” These are both variable and fixed expenses that you’d have to pay even if you didn’t sell anything in that period. They are “indirect,” meaning you can’t attribute them directly to any one sale.
When you subtract G&A expenses from Gross Profit, you get EBIT – Earnings Before Interest, Taxes and Depreciation. Some businesses may call it “Operating Profit.”
There will be a section called “Other Income and Expenses” toward the bottom of your income statement. There you will see interest expense, and very importantly, depreciation. Depreciation is a non-cash expense of a piece of your purchases of capital investments. Things you buy such as vehicles, equipment, buildings, computers, and improvements to your facility that last a long time and are used to run your business, are depreciable.
Once you deduct depreciation and interest, you get the net profit – or loss. That’s at the bottom of your Income Statement.
This is very easy to follow and good to review, especially the depreciation part
And hopefully there is a + sign in front of that number!