In a multiple-step income statement, what follows the gross profit calculation?

In a multiple-step income statement, the calculation that follows gross profit is operating expenses. This layout is structured to provide a more detailed breakdown of revenues and expenses, allowing for better analysis of the financial performance.

Gross profit is calculated by subtracting cost of goods sold (COGS) from sales revenue. Once gross profit is established, the next logical step is to account for operating expenses, which include selling, general, and administrative expenses. These costs are essential for running the business but do not include COGS, providing insight into the operational efficiency of the company.

By separating these expenses out, the multiple-step format helps users of the financial statements understand how much profit is generated from core operations before accounting for non-operating items, interest, and taxes. This distinction also aids in analyzing the company's operational performance separately from other financial activities such as financing costs or investment income.