Here we have Coca-Cola's income statement. Notice that unlike the balance sheet, this is not a snapshot at a point in time. Instead, it is for a period of time. Namely, the year ended December 31st. Three years are shown. The most recent year ended December 31st, 2023, and the two prior years for comparison purposes. The currency and units of measurement are the same as the balance sheet, millions of US dollars. So what does this income statement show us? Well, it shows that Coca-Cola made $45.8 billion of sales during 2023. These products sold cost Coca-Cola $18.5 billion, so the ingredients, packaging, labor, et cetera, and this is shown as cost of goods sold.

The difference between these two sales minus cost of sales, gives us the gross profit for the year of $27 billion. But these are not all of the expenses that Coca-Cola incurred. They also had selling general and administrative expenses or SG&A, so things like advertising costs and salaries of employees not involved in the manufacturing of the products, say the finance team at head office and other operating charges.

Deducting these costs from gross profits gives us operating income or operating profits of $11.3 billion for 2023. Don't be thrown off by the fact that costs or expenses are also shown as positive numbers. This is typical presentation for US companies. You need to read the description to know whether these are income or expense items, and so whether they should be added to or deducted from sales. Below the operating profit line, we see the impact of the company's financing decisions, interest expense of 1.5 billion dollars, which is driven by the amount of debt Coca-Cola has on its balance sheets. Coca-Cola also has interest income and some other investment income.

The next line item is income before income taxes, or profit before tax. And once we deduct the taxes, Coca-Cola has to pay in relation to this year's profit, we are left with the bottom line, which is net income. This is the profit that belongs to the shareholders of Coca-Cola and gets added on to reinvested earnings in the equity section of the balance sheet. So from sales of $45.7 billion, after taking into account all costs for the year, Coca-Cola generated $10.7 billion of profit for their shareholders. It's very useful to calculate some ratios to analyze the performance of companies over time and compared to their peers. One example is the calculation of a profit margin. If we express net income attributable to the share owners as a percentage of revenue, so the $10.7 billion divided by 45.8 billion, the net profit margin is 23.4%. Let's call it 23%. What this means is that for 2023, for every $1 Coca-Cola made in sales, they made 23 cents of profit for their shareholders.