Ecommerce Income Statement Template

Want a clear view of the financial health of your ecommerce business? Create an income statement in minutes with this free and easy-to-use template.
Launch Template
decorative image of an income statement

How to use the ecommerce income statement template

Tally your revenue

Start by entering your storefront’s total revenue within your desired time frame.

Subtract your costs

Gather your COGS (Cost of Goods Sold), such as web hosting, inventory, shipping, and packaging.

Know your net income

Finish populating the sheet and watch as your income statement appears.

Get the full story from your income statement

Spot areas to improve your financial health

Also called a profit and loss statement (P&L), this report can give you a snapshot of your ecommerce business’ financial health and help you identify areas to improve by tracking your revenue, costs, and net income over time.

Dive Into Your Income Statement
income statement generating valuable insights

Get strategic over the long term

Compare income statements over time to see if your ecommerce business is on a path to profitability. An increase in revenue may indicate traction while a decrease in COGS may spell greater operational efficiency.

Analyze Your Numbers
comparing income statements

Understanding income statements

An income statement or profit and loss (P&L) statement is a financial document that shows how much a business has spent and earned over a specific period of time — usually a fiscal quarter or year. The statement is used to understand a company’s profitability and identify areas where cost savings can be made.

While every P&L differs based on the type of business, there are a few major categories you’re likely to find on most profit and loss statements:
  • Revenue. A P&L statement begins with revenue, or the money a business has earned from sales or other activities during the measured time period.
  • Cost of goods sold (COGS). COGS is what it costs your company to deliver its core service or product. This means direct expenses like inventory, materials, labor, and equipment. It doesn’t include operating expenses like rent and utilities.
  • Gross profit. COGS is subtracted from revenue to determine gross profit, or a business’s profit before accounting for operating expenses. A product that has a COGS of $10 but retails for $25 would have a gross profit of $15.
  • Operating expenses. These are expenses not related to delivering your core product or service. Common operating expenses include rent, utilities, employee benefits, payroll taxes, sales and marketing, vendor contracts, and professional services (e.g., attorneys and accountants).
  • EBITDA. EBITDA stands for “earnings before interest, taxes, depreciation, and amortization.” It’s a good measure of a business’s ability to generate cash flow before taking into account certain non-operating expenses, such as interest on loans, taxes, depreciation of assets, and the reduction in value of intangible assets like patents or copyrights. On an income statement, EBITDA is sometimes called “operating earnings.”
  • Interest expense. Interest expense refers to interest owed by a company borrowing money, such as through a business loan, line of credit, or business credit card.
    Tax expense. This is the amount the business paid on its income tax for a given year.
  • Net income. Once you deduct all expenses from your gross profit, you’re left with your net income, which is the amount of money a company has made after paying off all expenses. This is often referred to as a company’s “bottom line,” and shows its overall profitability.
  • Loss. If expenses are higher than the business’s revenue, the business will generate a loss instead of a profit. Losses show how “in the red” (i.e., below profitability) the business is.

Business owners should use a profit and loss statement to understand if their business is profitable or on the path to profitability. Comparing P&L statements quarter-over-quarter and seeing an increase in revenue may indicate an increase in demand for the product or service.A decrease in COGS over a period of time may indicate the business is becoming more efficient. If operating expenses are keeping a business in the red, it may signal to a business owner that they should look to cut costs in some areas.If a young business isn’t showing a net profit on its P&L, it doesn’t necessarily mean trouble yet. In the early days, businesses have to spend more money to make money. As they achieve economies of scale, ideally their COGS goes down while revenue goes up, and they start to turn a profit.

Vertical and horizontal analysis — also called ratio and trend analysis — are two popular approaches to analyzing a P&L statement:
  • Horizontal analysis: This analysis looks at changes over time within a specific line item on the P&L statement. For example, analyzing fluctuations in revenue year-over-year can help a business owner spot trends or seasonal occurrences and optimize the business around them.
  • Vertical analysis: This type of analysis considers the size of expense items eating into a company’s revenue over time. When doing a vertical analysis, business owners look to see how they can improve revenue by cutting out unnecessary expenses.
Horizontal analysis is typically used to compare multiple business periods (e.g., FY 2021 vs. FY 2022) to identify trends in revenue and expenses and understand how much you spent vs. how much you had budgeted. Vertical analysis is used to dig into a specific time period to understand where costs can be cut. Financial professionals will usually run both analyses when reviewing a P&L statement, and finance teams often prepare monthly or quarterly flux analyses to explain changes over time and to understand the “why” behind an increase or decrease to an account.

The accuracy of your income statement hinges on the accuracy of your inputs. To ensure an accurate income statement, avoid these common errors:
  • Misclassifying sales: For instance, confusing shipping revenue with product revenue, or not accounting for returns and refunds properly.
  • Not including all your costs: Forgetting to include shipping, packaging, and payment processing fees.
  • Incorrectly categorizing costs: Including fixed costs like rent or other expenses like marketing in your COGS (Cost of Goods Sold).
  • Not accounting for tax: Forgetting sales tax liabilities in different jurisdictions you operate in.

Most businesses generate a P&L statement monthly, quarterly, and during tax season to give them a snapshot of the company’s financial performance. They can then perform a vertical and horizontal analysis to look for ways to maximize revenue. P&L statements are also useful for lenders or investors who want to get a better understanding of the business’s performance and financial health before agreeing to give the business any money.

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Disclaimers and footnotes

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