Assets = Liabilities + Shareholder's Equity (Or Owner's Equity)

Contributed Capital

+ Retained Earnings

Shareholder's Equity (or Owner's Equity)

Beginning RE

+ Net Income

– Dividends

Ending RE

Revenues

– Expenses

Net Income

Sales

– COGS

Gross Profit

– Operating Expenses

Total Income From Operations

– Non-Operating Expenses

Income Before Taxes

– Tax Expense

Net Income

(This is the Multi-Step Income statement)

Current Ratio = Current Assets / Current Liabilities

Working Capital = Current Assets – Current Liabilities

Profit Margin = Net Income / Sales Revenue

Sales

– COGS

Gross Profit

Gross Profit Margin = Gross Profit / Sales Revenue

Gross Profit Ratio is the same as Gross Profit Margin