Income Statement knowledge

Net Income: Revenue Sales - COGS = Gross Profit - OpEx = Operating income - interest expense + interest income = Net Income Before Taxes - tax = Net Income

Revenue/Sales: Price * Volume

COGS: Cost * Volume

OpEx: Fixed Costs

Degree of Operating Leverage: Shows how sensitive a company’s profit is to changes in its sales.

Degree of Operating Leverage Formula: Gross Profit/ Operating income