The next items will be Operating Expenses. This will include everything from sales and marketing to office rent. This category includes all the monthly fixed or administrative fees. What is meant by fixed fees is usually anything that a business owner would have to pay regardless of how much revenue they generate on a monthly basis. Now take the Gross Profit and subtract it from operating expenses. This will provide a Net Operating Income. Net Income represents the profit generated during a specific time period that the business has generated. If Net Income is negative, this means that the expenses of the business are more than the generated sales. Again if the business is not looking at the income statement, he/she will have no idea that they are losing money despite their great sales.