How to Calculate Net Income on Condensed Income Statements

by Mark Kennan

A condensed income statement offers a quick overview of a company’s revenues and costs. Instead of breaking down categories by line item, the condensed income statement reports the total for each category. Net income represents the company's revenues after accounting for various expense categories. If a condensed income statement does not list a company's net income, you can easily calculate it from the other data provided on the statement.

Subtract the company's costs of goods sold from the total revenue to calculate gross profit. For example, if the condensed income statement shows $8.2 million in revenues and $4 million in costs of goods sold, the company’s gross profit is $4.2 million.

Subtract the company's costs of administration, interest and sales to find the pretax income. If company’s gross profit is $4.2 million and it pays out $2.4 million in costs of administration and sales, the pretax income is $1.8 million.

Subtract the income taxes and interest charges from the pretax income to find the company's net income after tax from the condensed income statement. Continuing the above example, if the company has pretax income of $1.8 million and pays $950,000 in taxes, the company’s net income after taxes is $850,000.

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