Multi Step Income Statement Formula

A simple multiple step income statement separates income expenses gains and losses into two meaningful sub categories called operating and non operating.

Multi step income statement formula. The operating section and the non operating sections. The multi step income statement. The profit or loss is determined by taking all revenues and subtracting all expenses from both operating and non operating activities this statement is one of three statements used in both corporate finance including financial modeling and accounting. All operating revenues are grouped at the top of the income statement.

Multi step income statement is the income statement of the company which segregates the total operating revenue of the company from non operating revenue and total operating expenses of the company from non operating expenses thereby separating the total revenue and expense of a particular period into two different sub categories i e operating and the non operating. Most publicly traded companies use multiple step income statements which categorize expenses as either direct costs also known as non operational costs or indirect costs also known as operational costs. In the multi step income statement the operating income is calculated as the gross profit minus the total operating expenses. This layout makes it easier for readers to aggregate selected types of information within the report especially in regard to the core operations of a business.

It is a more detailed alternative to the single step income statement and uses multiple equations to calculate a business s net income. The operating section contains information about revenues and expenses of the principle business activities. Unlike the single step income statement format where all revenues are combined in one main income listing and all expenses are totaled together. A multi step income statement reports a company s revenues expenses and overall profit or loss for a specific reporting period.

Multi step income statement is divided into two main sections. Gross operating pretax and after tax. Direct costs refer to expenses for a specific item such as a product service or project. The income statement is one of a company s core financial statements that shows their profit and loss over a period of time.

The multi step income statement includes four measures of profitability. The multi step income statement includes multiple subtotals within the income statement. An alternative to the single step income statement is the multiple step income statement because it uses multiple subtractions in computing the net income shown on the bottom line. In general interest expense and income tax expense are not included as operating expenses which gives rise to the term ebit or earnings before interest and taxes another name for operating income.