Income Statement

Revenue

Top Line of the Income Statement

Cost of Goods Sold

• Scales Up → the more you sell the more COGS

• FIFO —> Less expensive to calculate COGS

• LIFO → More expensive to calculate COGS

Gross Profit

Revenue - COGS

Gross Margin

• (Revenue - COGS / COGS) x 100 

• = the % Revenue left after accounting for COGS

Operational Expenses

Either

• Research & Development (R&D)

• General & Administrative (G&A)

• Sales & Marketing (S&M)

Depreciation & Ammoritization

1. Depreciation → The decrease value of a physical asset

2. Amortization → the decrease value of an intangible asset

Operating Income / EBIT

Revenue - COGS - OpEX - D&A

• How much more a company has before taxes

Interest

= Interest Expense - Interest Income

Tax

Taxes do NOT apply to companies with negative pre tax income

Net Income

• Bottom Line of the Income Statement

• Top Line of the Cash Flow Statement