Introduction to the income statement | Stocks and bonds | Finance & Capital Markets | Khan Academy

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The income statement, revenue, gross profit, operating profit, net income, ROA and ROE. Created by Sal Khan.
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[@khanacademy]

That is one of the definitions. The standard formula takes out the effect of interest and tax savings from interest and is (net income + interest - tax savings from interest)/Assets which is essentially saying how much earnings would I have if I weren't paying debt. If you wanted a pre-tax ROA than you could just add back interest and taxes and divide by Assets (or EBIT/Assets which is, for the purposes of this examples, the same as Op profit/Assets

[@ramyaviswesh]

Thank you! so much for all your teachings.I am able to learn financial statements better! than any regular class teachings. Thank you soo much, God bless u and u r family

[@matthewreid2664]

Thank you for explaining accounting to a marketing person in very simple terms....I've been struggling with my lecturer!

[@RansonJoe]

Your channel is an incredible resource. Thank you!

[@oshua132]

Thank you Mr. Khan, these videos are going to allow people to understand this information and get in a game that they have been on the tail end of. Thank you, thank you, thank you. Many blessings to you and your family.

[@mizzprinks]

I am a medical student and recently an MBA student to learn about finance. This is the first time I actually wanna learn finance after starting the course, because it was simply so boring to a medical student like me and made absolutely no sense. Now it does, THANKYOU! GOnna watch the rest of your economics videos::)

[@Vhuimo]

awesome dude!!!, writing my exam tomorrow and they better not bring up the income statement because imma bowl it out like a boss after this video!!!#fFromSouthAfrica

[@royray3671]

My accounts teacher is wack and i never understand what he teaches But when i come to your channel it makes it so better. Thank you.❤

[@NP-cx8oc]

Thank you! It's very clear.

[@emmajackson3205]

You have saved my life! i have a huge business studies booklet due and i couldn't finish it without doing this and i did it!!! thankyou xxx

[@tariqsheikh5569]

Every time when you repeact these things, learn something new. Thanks for explanning in such an easy way.

[@lizyip7951]

Thanks so much! I finally understand what is ROA and ROE!

[@piko9311]

This is very helpful, thank you very much indeed!

[@oneskill_ppt]

well explained, thanks Khan :)

[@linuxd]

He explains everything! From cells, to atoms, to finance. You're the man Khan

[@0nlyt0me]

Great way of teaching this. Thanks!

[@Teeybabyboo]

That you so much for this video. I am currently registered in a finance class, and This is just what i needed to brush up on my accounting. very well explained, and easy to understand.

[@AZAZEL_TK]

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[@blockomaniac]

Teeybabyboo exact same for me

[@musak.4068]

hey

[@Dapgirl70]

Great video! I'm feeling more confident. Thanks you!

[@wonderphill5710]

im in grade 7 in 2016 and it helps a lot with my entrepreneurs' day

[@Systematik101]

This was a really good video tutorial! Thanks Man!

[@hassanbazzi3545]

Thank you so much for your explanation.

[@thulethianh]

Thanks for your teaching. It's really easy to understand. Wish you all the best

[@twingirlmk4128]

Thanks so much for your amazing explanation for us. I can learn income statement better than before. In the class I really difficult to caught up a lesson with professor and I also can not understanding some point, but now I can understand 50% of it and I also learn to do some exercise too. ❤️😅

[@megaelliott]

Thanks Sal for these videos.

[@TheColoredComrades]

i just want to say I find you to be a very inspiring man and look forward to volunteering on your site as a translator.

[@123sasakigmailcom]

soo easy to understand... thanks man!!

[@JediFight]

Great slow explanation. Thank you. Very nice to have information like this available.

[@ThunderersTriumph]

Nice help, thank you!!!!

[@diogocorreacoelho4288]

Damn fam, straight up you a G! Probably best explanation online! real talk, 100.

[@clubchelas4471]

this is great...thank you.

[@gilpuy]

yesss...very outstanding explanation...helping to understand all of those subject that makes me suck,but now i start to like it...you are amazing mr khan, i hope my real lecturer in campus is you sir...salute from indonesia

[@armani8983]

I thought about khan's academy while watching this video and saw channel name after it, omg it's khan's academy video ! awesome.

[@sandbar3000]

I loved your video on the usefulness of the balance sheet. I love roi roa... And how liquid is the company. I have an MBA in 2011. But my depression has kept me low and it's very hard to sell my skills in job interviews. I have watched 25 videos of yours in this series so far. If it was not for my depression...I'd teach accounting!

[@owldat]

Awesome!!

[@LigiaChacon1414]

Interesting way to abbord concepts of financial statements. I could say that im known more about this area.

[@HussainPhoto87]

Damn Accounting professor. You're my man!

[@alfiedj]

Yea, thx man, helpful stuff!

[@gilpuy]

yesss...very outstanding explanation...helping to understand all of those subject that makes me suck,but now i start to like it...you are amazing mr khan, i hope my real lecturer in campusis you sir...salute from indonesia

[@InstTaxSolutionsLLC]

Excellent presentation about an income statement, which may also be known as a profit and loss statement. This is one of the most basic accounting documents, but it is also one of the most used financial reports.

[@jangzterrizer9405]

My goodness you're a good teacher

[@angeisrael6478]

Thank youu so much I understand it better now

[@Gilvids]

This is gold!

[@shashank4277]

Beautiful!!

[@travis9260]

Khan :) thank you

[@19NooNaDa]

Thank you for the video.

[@amandeepaaaaa]

thanks man.. i like your stuff...

[@hechen9980]

very helpful for me in a accounting college

[@cool70200]

Thanks for the video.

[@petertjebooty]

You're amazing!

[@Geesjuh]

thankyou so much!!

[@MrDaddydiva]

This could be the most useful video for start up's.

[@rawsip5037]

very well explained

[@rolexshadow]

I have my final tomorrow and now I'm much more confident taking it

[@noisternes]

HI SAL! Thanks.

[@2525georgia]

Why can't my lecturer explain it like this!!!! Thanks, you're the best!

[@daniellos333]

very concise.

[@samreenashraf6426]

helpfull. thank you

[@namphetzzzz]

Thank you .

[@iambond123]

HI Sal Your videos are really Usefull. Thanks Indeed Chirag Ali

[@thehoneybadger9389]

Thank you very much :)

[@vendettahappyno2769]

not what I needed but u r still quite smart .

[@imcurious1009]

Legend!

[@Dayao12]

I'm passing my quiz tomorrow! Thanks so much for this tutorial!

[@COMNitoZAwomi]

Did u pass??? Lol

[@alghafli89]

Thank you

[@ohmitchiebabe]

:) Easy to understand video

[@nkamal2007]

@khanacademy thankyou very much..apecial thanks to Mr. Salman Khan...

[@anzwertree]

Dude, you rock

[@shirleygaietymoyo8041]

this was very helpful, thanks a lot

[@AZAZEL_TK]

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[@atrumluminarium]

It's that easy! :O

[@rutujabankhele1889]

better than my accounts proffessor!!!!!!!!!!!!

[@sultanbalobaid2463]

thanks broo

[@xx480o]

Just what u needed!! Thanks a lot :)

[@AllDailyInspirations]

+Faiza Ismail lol u? or "i"

[@xx480o]

+Linda A true I* lol :'D

[@xx480o]

+Linda A true I* lol :'D

[@zufrieden23]

the best!!!!!!!!!!!

[@poshstars]

you r right .

[@nicoa263]

Not trying to dis. This guy is amazing and I learn from him everyday. But just to put my .2 out there. ROA is Net income divided by Total Assets. Just for all the people to know, one must account for Continuing Operations and Non-Recurring events to get the total net income. The example above, though perfect for covering the basics, is assuming that the operating profit is the net income to get the ROA.

[@nervozaur]

hahaha, nailed it!

[@yasu_tv]

Income Statement/Balance Sheet/Cash Flow Statement/G&A/SG&A/Cost of Goods Sold/Marketing/Sales/Gross Profit/Operating Profit/Enterprise Value/Return on Asset/ROA/Pre-tax Income/Net Income/Depreciation/Amortization/Return on Equity/ROE/Variable Cost/Fixed Cost/Sales People/Auditor/plain vanilla/jumble up/nuance/detract/

[@KLFacebook]

better than our doctor

[@devbodaghe]

In real estate operating profit will bet the same thing as net operating income (NOI). Expect that taxes is included included.

[@uknwtheusername]

Question: where would you find the figure for the company's total assets inside their financial statements (i.e. income state., balance sheet, cash flow statement, etc.)?

[@delinquent2002]

You are really helping me to understand the things i did not understand befor...lol. I have a question and maybe you can help me with this.. I buy Merch.. from a wholesaler out of California. When I recieve my merch... and the invoice from the wholesaler there is a Freight charge. When i do my Quarterly Taxes, do i include the freight charges? Or is it a deduction?

[@fionaNESS]

statement of changes in equity!!!

[@SuperJillian]

Great videos, thank you. Question: You explained ROA = 1M/10M=10% in which $1M came from Operating Profit. I thought it should be Net Income, which is $350,000. Please explain since I am confused! Thanks

[@AminaLn]

Is there anything you can't explain? I wish I had such a broad knowledge of so many different topics.

[@Redmile2006]

travel bug That's what happens when we spend our free time reading books and watching educational videos instead of playing video games and watching Netflix :)

[@jcdlrv]

hi, i want to know what is the next video i would see after price and market capitalization.

[@meanmanturbo]

Maybe a little to much detail, or maybe it is just a difference between US and Sweden (since we have all these nice taxes here...), but when I did this at university you would always try to max out write downs on assets to minimize pre tax income to minimize the taxes you pay. Of course, this is bad for share holders, since it would make the company look worse of then it really is.

[@mehwhyausername1]

ROA really isn't generally based on operating profit. almost everyone uses net income as a general rule.

[@Amicoskates01]

Imagine owning a business that does 5 mil in sales, but only profits 350k. Sheesh

[@lucuslucuses5595]

Are wages a part of SG&A?

[@AbhaySoorya]

Hey Sal - Thanks for making these videos..Quick question - you said that ROA = Operating profit/Total asset value....I thought it was Net Income/Total Asset Value? PLEASE confirm this..Thanks!

[@gothicking999]

Excellent, just one question though, whats a widgit?

[@KarenSanderson1]

Revenues minus cost of doing business is income.

[@kingtigercrownestate9102]

Assuming that payroll for ALL employees is included and not just sales people right?

[@ruthlessluder]

Is the ROA = net income / asset? In your example it's operating profit / asset.

[@PercyWellington]

is the interest actual interest or interest + principle? like from a mortgage payment?

[@loveormoney786]

Is CapEX included in COGS?

[@jennybon999]

khanacademy you're fucking amazing

[@jedThorpe]

Is Operating profit same as EBITDA?

[@blahlul95]

Why is return on assets based off the operating profit and not the net income?

[@desse56]

Great question, was thinking about the same

[@twentysixstrings]

Where is assets depreciation in costs of Income statement ?

[@Gilvids]

all this seems complicated to start this grand scale of a business down to only getting few thousand dollars income. on the other hand you have people shooting a ball in ring and gets paid millions of dollars a year. oh the world is not fair!