What is an Income Statement?
The purpose of a company, generally speaking, is to make money, and the income statement, also known as ‘earnings’ or ‘profit and loss’ statement, tells you how much a company made in sales and how much it cost to make those sales, in a given period of time, usually three months (in a ‘quarterly report’) or over the course of a year (in the ‘annual report’).
Learning to read an income statement is a useful skill as we learn about investing.
And, as with a Balance Sheet, there’s also a way that we can apply this to our own personal finances (you knew that was coming…)
There’s an idea out there of having ‘multiple streams of income.’ How does money flow into your life? How many streams are there?
Maybe take a moment to write down the different sources of income, and assess? Create your own personal Income Statement. And if you’d like to increase your income, go back to this post and put some attention there?
Someone I know suggested the exercise of writing down a hundred ways of generating income. It’s a fun thing to do! Will you try it? What’s the most outlandish one you can think of?
Let me know in the comments, and as always, thanks for reading this.
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And thanks to DL for helping me pick this week’s topic!