How to Calculate an Interest Rate for an Income Statement

by C. Taylor, studioD

An income statement displays a business' revenues and expenses to give managers or investors an overview of the company's profitability. Interest may come in the form of debt for which interest payments are required, or investments from which interest is received. The interest rate may not be included in the income statement, but you can calculate them with the interest amount, principle balance and length of time during which interest was collected.

Look on the income statement for the interest income or debt, the principle balance and the time period for which the interest was calculated, such as for monthly or annual income statements.

Divide the interest received by the principle balance. As an example, if the company paid $1,000 in interest on a $200,000 loan, then you would get 0.005. This gives you the periodic interest rate.

Multiply the periodic interest rate by the number of payment periods per year. If the example used a monthly income statement, multiply by 12 to get 0.06, or 6 percent.

About the Author

C. Taylor embarked on a professional writing career in 2009 and frequently writes about technology, science, business, finance, martial arts and the great outdoors. He writes for both online and offline publications, including the Journal of Asian Martial Arts, Samsung, Radio Shack, Motley Fool, Chron, Synonym and more. He received a Master of Science degree in wildlife biology from Clemson University and a Bachelor of Arts in biological sciences at College of Charleston. He also holds minors in statistics, physics and visual arts.