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O P I N I O N
The income statement
A t JBCI, one of our guiding principles is transparency. We embrace sharing relevant financial information through condensed income statements during management team meetings. These statements include key performance indicators that provide a snapshot of the short- and long-term health of the firm. What engineers need to know (but often don’t) about this critical financial tool and how it can help a firm succeed.
or $50,000, in February, and the final 20 percent, or $20,000, in March. For the first quarter of the year the revenue will be $100,000. The objective is to match the revenue that was generated to the ex- pense that was incurred to earn that revenue (labor and materials, or direct expense). “A better understanding of the income statement is critical when analyzing KPIs because many of the KPIs are derived from the information contained within the income statement.”
John McCardell GUEST SPEAKER
The income statement – AKA profit and loss or P&L – is one of these useful tools. A better understanding of the income statement is critical when analyzing KPIs because many of them are derived from the information contained within the income statement. So what does the income statement include? It is simple and made up of three sections: 1)Revenue. A firm’s revenue is a measure of how much raw income a company is generating from services rendered. In essence, this is the fee that is generated from the skilled and technical work that is produced. As an example, a firm receives a fixed fee contract of $100,000 in January. According to the percentage of completion method, the firm will recognize revenue on the income statement of 30 percent, or $30,000, in January, 50 percent,
See JOHN MCCARDELL, page 10
THE ZWEIG LETTER August 27, 2018, ISSUE 1262
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