Income Statement Template
Please download free income statement template to produce a year-over-year income statement with your own data.
What are Common Drivers for Each Income Statement Item?
| Line Item | Driver or Assumption |
|---|---|
| Sales Revenue | Selected growth percentage, pegged growth percentage based on index (such as GDP) |
| Cost of Goods Sold | Percentage of sales, Fixed dollar value |
| SG&A | Percentage of sales, fixed amount, trend, fixed dollar value |
| Depreciation and Amortization | Depreciation Schedule |
| Interest Expense | Debt Schedule |
| Income Tax | Percentage of pre-tax income (effective tax rate) |
While these drivers are commonly used, they are just general guidelines. There are situations where intuition must be exercised to determine the proper driver or assumption to use. For example, a specific entity may have zero revenue. As such, the percentage of sales drivers cannot be used for COGS. Instead, an analyst may have to rely on examining the past trend of COGS to determine assumptions for forecasting COGS into the future.
The core statements used in financial modeling are the same core statements used in accounting. There are three: the Income Statement, the Balance Sheet, and the Cash Flow Statement. In a financial model, each of these statements will impact the values of the other statements.
