Financial Statement Analysis 101 : Income Statement

Explore the income statement, also called the profit and loss statement (PNL), summarizing a business's revenue and expenses over a period to show profit or loss.

Learn how revenue equals price per unit times quantity sold, with product sales or services rendered, and identify revenue drivers like stores or screens for large businesses.

Identify direct costs and indirect costs, including cost of goods sold and cost of services. Compare fixed indirect costs like rent with variable indirect costs like advertising tied to revenue.

Learn how tax expense is calculated on profit before tax in an income statement, using tax rate examples, and distinguish between revenue, cost, and net profit.

Separate interest costs from the other expenses to reveal ebit, also known as operating profit or pbt. Learn how debt drives finance cost and lowers profit.

Identify direct costs, or COGS, and understand how they tie to sales by tracing raw materials and direct labor to goods sold or services provided. These costs scale with sales.

Analyze income statements using five profitability margins (gross profit, EBITDA, EBIT, pre-tax, net) relative to revenue. Apply time-series and cross-section analysis to compare margins over years and against competitors.

Apply practical income statement analysis to a real case from D-mart by calculating EBITDA, EBIT, and PAT margins, and compare trends over years or with competitors to gain insights.