The Income Statement

What you'll learn

• ✓Read an income statement
• ✓Distinguish gross, operating, net margin

Lessons

1. ☕
   Revenue Is Not Profit

   A coffee chain made $400M and didn't make money
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2. Top to Bottom

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3. The Margin Trio

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4. EBITDA and Its Critics

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5. Reading Apple's Income Statement

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6. Boss Lesson: Read Any Income Statement

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Sources

All content is drawn from the sources below. We deliberately avoid unverified material.

• Apple Inc. Form 10-K, fiscal year 2024
  U.S. Securities and Exchange Commission (EDGAR) · institutional
  Source for Apple FY2024 revenue, gross profit, operating income, net income, and tax provision used in lessons 5 and 6.
  https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000320193&type=10-K
• Apple Inc. Form 10-K, fiscal year 2023
  U.S. Securities and Exchange Commission (EDGAR) · institutional
  Source for Apple FY2023 figures used in the year-over-year comparison in lesson 5.
  https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000320193&type=10-K
• FASB Accounting Standards Codification, Topic 220 (Income Statement: Reporting Comprehensive Income)
  Financial Accounting Standards Board · institutional
  Authoritative US GAAP guidance on the structure of the income statement.
  https://asc.fasb.org/
• Financial Statement Analysis, 11th edition
  K. R. Subramanyam and John J. Wild, McGraw-Hill · book
  Reference for definitions of gross, operating, and net margin, and for quality-of-earnings discussion.
• Financial Statement Analysis and Security Valuation
  Stephen H. Penman, McGraw-Hill · book
  Reference for the operating vs. financing distinction and for income-statement reformulation.
• Wesco Financial Corporation, 2002 letter to shareholders
  Charlie Munger / Wesco Financial · article
  Source for Munger's 'earnings before all the bad stuff' critique of EBITDA, used in lessons 4 and 6.
• Beyond EBITDA: A look at non-GAAP measures
  U.S. Securities and Exchange Commission (Office of the Chief Accountant) · institutional
  Background on EBITDA being a non-GAAP metric and the SEC's reconciliation rules.
  https://www.sec.gov/