Understanding a Statement of Comprehensive Income

A statement of comprehensive income provides a detailed breakdown of an organization’s performance over a specific period, including the gains or losses the organization makes.

Revenues: Also called sales, this line shows the inflows from the delivery or manufacture of a product or from the provision of a service to customers.
Cost of Sales: Sometimes referred to as Cost of Goods Sold (COGS), this line represents the cost of producing the goods sold by a company.
Gross Profit: Gross profit is calculated as revenues minus cost of sales. Gross profit represents a company’s profit after subtracting the costs directly associated with producing its goods or services.

Understanding Expenses

Operating Expenses: These are costs associated with day-to-day operations, like wages, utilities, and rental fees. They are not directly tied to production.
Earnings Before Interest and Taxes (EBIT): Often known as operating income, this is determined by subtracting all operating expenses from gross profit.
Interest Expense: This is the cost of borrowing money, such as interest on bank loans.
Tax Expense: The amount of income tax the company must pay within a given period. It depends on the profit of the company, after consideration of allowable charges.

Understanding Net Income and Other Comprehensive Income

Net Income: It is one of the most important line on the Statement of Comprehensive Income. It shows a company’s total earnings or profit.
Other Comprehensive Income (OCI): OCI includes gains and losses that have yet to be realised such as gains or losses from foreign exchange holdings.