How to read an income statement?
Welcome to Professor Savings. We teach finance basics.
Hi I’m your host today Rayfil Wong.
Today we will learn about to how read an income statement or at least the basics
aka profit and loss statement.
Why should we learn?
We need to be a more informed investor.
Income statement found in our annual report.
revenue= money received from sale of products or services before expenses taken out.
Also known as the TOP LINE.
Operating expense is the outflow of money to person or group to pay for item or service.
Net income is the result after all expenses account for aka the bottom line.
Note that the income statement represent a period of time such as Jan 1st to March 1st.
Other terms you might see are cost of goods sold which are direct cost
to goods sold.
Example such as manufacturing or merchandising.
The non operating section include other revenue or gains such as
income, rent, income from patents.
These are just a few examples so if you would like to learn more
Professor Savings signing off!