How to Calculate a Corporation's Gross Income


Whether you're looking at your own company's books or investigating a company you're considering investing in, there's no limit to the number of metrics you can use. The gross income of a corporation measures how much of its receipts it keeps after taking out the costs of the goods sold. To figure it, you need to know the company's total receipts, any returns or allowances, and the cost of the items the corporation sold, all of which can be found in the company's annual statement -- if it's publicly traded. If not, you might not be able to get the information.

Calculate the company's total revenues. This includes all income from selling goods or services, rents, dividends, royalties and capital gains. For example, say the corporation has $9.5 million in sales of goods, $500,000 in rents and $100,000 in dividends. The corporation's total revenue equals $10.1 million.

Subtract any returns or allowances from the corporations total revenues to figure the gross revenues for the year. For example, say the company had $10.1 million in sales but had $100,000 in returns. Subtract $100,000 from $10.1 million to get $10 million in gross revenues.

Subtract the cost of goods sold from the gross revenues to calculate the company's gross income. For example, say the goods the company sold cost $5 million. Subtract $6 million from the $10 million in gross revenues to find the company's gross income equals $4 million.

Tips & Warnings

  • A corporation's gross income doesn't include other costs besides the price paid for the goods it sells, such as overhead, employee salaries and research and development.

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