Earnings Statement Terms

INCOME STATEMENT

This statement shows how much money a company made and spent over a period of time, like a quarter or a year, and whether it ended up with a profit or a loss.

Fiscal Quarter

The 3-month block of time this report covers. Companies label these Q1, Q2, Q3, Q4, but a company's "fiscal year" doesn't always start in January, so their Q1 might not match the calendar year's Q1.

Period Ending

The exact date the reporting period stopped counting. Think of it as the "as of" date for this specific report.

Revenue

All the money a company brought in from selling its products or services, before subtracting any costs. This is also called "sales" or the "top line."

Revenue Growth (YoY)

How much bigger (or smaller) revenue is compared to the same quarter one year ago. "YoY" means "year over year." Shown as a percentage.

Cost of Revenue

The direct cost of actually making or delivering what was sold (materials, direct labor, shipping). Also called "Cost of Goods Sold" or COGS. Does not include marketing, rent, or salaries of people who don't make the product.

Gross Profit

Revenue minus Cost of Revenue. This shows how much money is left after paying only for the product itself, before any other business expenses.

Selling, General & Admin (SG&A)

Everyday business costs that aren't tied directly to making the product: marketing, office rent, admin salaries, sales team pay.

Research & Development (R&D)

Money spent inventing or improving products, like a lab or engineering team's budget.

Other Operating Expenses

Any other cost of running the business day-to-day that doesn't fit neatly into SG&A or R&D.

Total Operating Expenses

SG&A + R&D + Other Operating Expenses added together. All the costs of running the business, not counting the product cost itself.

Operating Income

Gross Profit minus Total Operating Expenses. This is the profit from actually running the core business, before interest payments or taxes. Also called EBIT (defined below).

Interest Income

Money earned from having cash sitting in interest-bearing accounts or bonds, like interest from a savings account.

Interest Expense

Money paid out because the company borrowed money (loans, bonds). Like paying interest on a credit card, but for a company.

Other Non-Operating Income (Expense)

Money gained or lost from things outside the normal business, like selling an old building or a one-time lawsuit settlement.

Total Non-Operating Income (Expense)

Interest Income minus Interest Expense, plus/minus Other Non-Operating items, all combined into one number.

Pretax Income

Operating Income plus/minus all the non-operating items above, before the government takes its cut in taxes.

Provision for Income Taxes

The amount of money set aside to pay in taxes on the profit.

Net Income

The final profit after every single expense, including taxes, has been subtracted. This is the famous "bottom line."

Net Income to Common

Net Income after subtracting any payments owed to preferred stockholders (a special class of investor who gets paid first). What's left over for regular ("common") shareholders.

Net Income Growth

How much bigger or smaller Net Income is compared to the same period last year, as a percentage.

Shares Outstanding (Basic)

The actual number of stock shares that exist and are owned by investors right now.

Shares Outstanding (Diluted)

The number of shares that would exist if every stock option, bonus grant, or convertible bond were turned into actual shares. Always equal to or higher than Basic shares.

Shares Change (YoY)

How much the share count grew or shrank compared to a year ago. Shrinking usually means the company is buying back its own stock; growing usually means it's issuing new shares.

EPS (Basic)

Net Income divided by Basic Shares Outstanding. Tells you how much profit was earned per share of stock, using the current share count.

EPS (Diluted)

Net Income divided by Diluted Shares Outstanding. The more conservative version of EPS, since it assumes all possible extra shares get created.

EPS Growth

How much EPS grew or shrank compared to the same period last year, as a percentage.

Free Cash Flow (FCF)

The actual cash left over after the company pays for its regular operations AND its equipment/property purchases. This is real spendable cash, not just an accounting profit number.

Free Cash Flow Growth

How much FCF grew or shrank compared to the same period last year.

Free Cash Flow Per Share

Free Cash Flow divided by the number of shares, so you can see how much cash-generating power belongs to a single share of stock.

Dividends Per Share

How much cash the company pays out to each shareholder per share they own, usually every quarter.

Dividend Growth

How much the per-share dividend payment has grown compared to a year ago.

Gross Margin

Gross Profit divided by Revenue, shown as a percentage. Tells you what percent of every sales dollar is left after paying for the product itself.

Operating Margin

Operating Income divided by Revenue, as a percentage. Shows how profitable the core business is before interest and taxes.

Profit Margin

Net Income divided by Revenue, as a percentage. Shows what percent of every sales dollar becomes final profit.

FCF Margin

Free Cash Flow divided by Revenue, as a percentage. Shows what percent of every sales dollar turns into actual spendable cash.

EBITDA

"Earnings Before Interest, Taxes, Depreciation, and Amortization." Operating Income with two non-cash accounting charges (depreciation and amortization) added back in. Used to estimate cash profit from operations.

EBITDA Margin

EBITDA divided by Revenue, as a percentage.

EBIT

"Earnings Before Interest and Taxes." Another name for Operating Income — profit from the core business before interest payments and taxes are subtracted.

EBIT Margin

EBIT divided by Revenue, as a percentage. Same thing as Operating Margin.

Effective Tax Rate

The actual percentage of Pretax Income that got paid in taxes. Calculated as Provision for Income Taxes divided by Pretax Income.

BALANCE SHEET

This statement is a snapshot, taken on one specific day, of everything the company owns, everything it owes, and what's left over for its owners.

Cash & Equivalents

Actual cash in the bank plus things that can be turned into cash almost instantly, like money market funds.

Short-Term Investments

Investments the company plans to sell or cash out within about a year, like short-term bonds.

Cash & Short-Term Investments

Cash & Equivalents plus Short-Term Investments added together — basically everything the company could get its hands on very quickly.

Cash Growth

How much the cash pile grew or shrank compared to a year ago, as a percentage.

Accounts Receivable (AR)

Money that customers owe the company for stuff they already bought but haven't paid for yet, like an unpaid invoice.

Inventory

The value of unsold products sitting in warehouses or stores, waiting to be sold.

Other Current Assets

Any other thing of value the company expects to use or convert to cash within a year that doesn't fit the categories above.

Total Current Assets

Everything the company owns that it expects to turn into cash or use up within one year, all added together (cash, receivables, inventory, etc.).

Net Property, Plant & Equipment (PP&E)

The value of physical stuff the company owns and uses to run the business — buildings, factories, machines, vehicles — after subtracting wear-and-tear (depreciation).

Other Intangible Assets

Valuable things the company owns that you can't physically touch, like patents, trademarks, or brand licenses.

Goodwill

An accounting placeholder created when a company buys another company for more than that company's assets were technically "worth" on paper. It represents the extra value of things like reputation and customer relationships.

Long-Term Investments

Investments the company plans to hold for more than a year, like stock in another company.

Other Long-Term Assets

Anything else of value expected to be used or held for more than a year that doesn't fit the categories above.

Total Assets

Absolutely everything the company owns, added together — current assets plus long-term assets.

Accounts Payable (AP)

Money the company owes to its own suppliers for things it already received but hasn't paid for yet — the flip side of Accounts Receivable.

Accrued Expenses

Costs the company has already incurred (like employee wages already earned) but hasn't actually paid out in cash yet.

Short-Term Debt

Loans or borrowed money that must be paid back within the next year.

Total Current Liabilities

Everything the company owes that's due within one year, all added together (accounts payable, accrued expenses, short-term debt, etc.).

Long-Term Debt

Loans or bonds that don't need to be paid back for more than a year.

Long-Term Leases

Contracts the company signed to rent things (like office space or equipment) for a long period, treated like a form of debt on the balance sheet.

Other Long-Term Liabilities

Any other money owed that isn't due for more than a year and doesn't fit the categories above.

Total Long-Term Liabilities

Long-Term Debt plus Long-Term Leases plus Other Long-Term Liabilities, added together.

Total Liabilities

Everything the company owes, both short-term and long-term, added together.

Preferred Stock

A special class of company ownership that gets paid dividends before regular shareholders and usually doesn't get to vote on company decisions.

Common Stock

The basic, regular type of company ownership. The accounting value assigned to the shares that everyday investors own.

Treasury Stock

Shares the company bought back from investors and is now holding onto itself. This reduces the total ownership value because the company essentially owns a piece of itself.

Additional Paid-in Capital (APIC)

Extra money investors paid for shares above their bare minimum accounting value when the company originally sold that stock.

Accumulated Other Comprehensive Income

A bucket for certain gains and losses (like currency exchange effects) that haven't hit the Income Statement yet but still affect ownership value.

Retained Earnings

All the profit the company has made since it started, minus all the dividends it has ever paid out. Profit the company chose to keep and reinvest instead of giving to shareholders.

Shareholders' Equity

What would be left over for the owners if the company sold everything it owns and paid off everything it owes. Total Assets minus Total Liabilities.

Total Liabilities & Equity

Total Liabilities plus Shareholders' Equity. This number must always exactly equal Total Assets — that's the core rule of a balance sheet.

Total Debt

Short-Term Debt plus Long-Term Debt added together — every dollar of borrowed money the company owes.

Net Cash (Debt)

Cash & Short-Term Investments minus Total Debt. A positive number means the company has more cash than debt; a negative number means it owes more than it holds in cash.

Net Cash Growth

How much Net Cash (Debt) has grown or shrunk compared to a year ago.

Net Cash Per Share

Net Cash (Debt) divided by the number of shares outstanding.

Book Value

Another name for Shareholders' Equity — the accounting value left for owners after subtracting all debts from all assets.

Book Value Per Share

Book Value divided by the number of shares outstanding. The accounting value that belongs to a single share.

Tangible Book Value

Book Value with Goodwill and Other Intangible Assets subtracted out. A more conservative measure that only counts assets you could physically sell.

Tangible Book Value Per Share

Tangible Book Value divided by the number of shares outstanding.

CASH FLOW STATEMENT

This statement tracks actual cash moving in and out of the company — separate from accounting profit — split into three buckets: running the business, investing in the business, and financing the business.

Net Income

The same bottom-line profit number from the Income Statement. It's the starting point for this whole statement.

Depreciation & Amortization (D&A)

An accounting charge that spreads the cost of equipment or intangible assets out over several years. No actual cash leaves the company when this is recorded, so it gets added back here.

Stock-Based Compensation (SBC)

Company stock given to employees instead of (or in addition to) cash pay. No cash leaves the company for this, so it's added back, even though it does create new shares.

Other Adjustments

Any other non-cash accounting item that needs to be added back or subtracted to get from accounting profit to real cash.

Change in Receivables

How much money owed by customers (Accounts Receivable) went up or down this period. If customers owe more, that's actually a cash outflow, because you sold stuff but haven't collected cash for it yet.

Changes in Inventories

How much the value of unsold products went up or down. Buying more inventory uses up cash.

Changes in Accounts Payable

How much money owed to suppliers went up or down. Owing more to suppliers actually frees up cash, because you're delaying paying for stuff you already have.

Changes in Accrued Expenses

How much money owed for costs already incurred (like unpaid wages) went up or down.

Changes in Other Operating Activities

Any other small working-capital changes not captured above.

Operating Cash Flow (CFO)

The actual cash generated (or used) by running the core, everyday business — starting from Net Income and adjusting for all the non-cash items and working-capital changes above.

Operating Cash Flow Growth

How much Operating Cash Flow grew or shrank compared to a year ago.

Capital Expenditures (CapEx)

Cash spent buying or upgrading physical stuff like buildings, machines, or equipment.

Purchases of Investments

Cash spent buying stocks, bonds, or other financial investments.

Proceeds from Sale of Investments

Cash received from selling stocks, bonds, or other investments the company previously owned.

Payments for Business Acquisitions

Cash spent buying other companies.

Other Investing Activities

Any other cash spent or received related to long-term investing that doesn't fit the categories above.

Investing Cash Flow (CFI)

All the cash spent or received on long-term investments and asset purchases/sales, added together (CapEx, acquisitions, buying/selling investments).

Long-Term Debt Issued

Cash the company brought in by borrowing new long-term money (like issuing a bond).