The Income Statement
Revenue to Net Income, step by step
The income statement is a waterfall. Revenue at the top — every dollar customers paid for the company's products or services. Each line below it subtracts a layer of cost — what it took to make the product, what it cost to run the company, what creditors and the IRS took, and finally what's left for shareholders.
The waterfall doesn't just count profit; it tells you what kind of business you're looking at. The shape of the cascade — how much falls off at each step — is the difference between a high-margin software franchise and a low-margin grocery chain. From the top to the bottom, the income statement subtracts five categories of cost.
Cost of goods sold (COGS) is what it took to make the product. Operating expenses (often broken into R&D and SG&A) are what it took to run the business.
That is the opening. Finishing a lesson is where it stops being interesting and starts being useful: the full lesson runs to 8 sections and ends with 4 practice questions. A free account is what opens the rest, and the other 255 lessons in the Academy with it. No card.
What this lesson covers
- 1Three margins — the most important percentages on the page
- 2GAAP vs non-GAAP — the gap to watch
- 3Apple's income waterfall — FY2024
- 4Explore NVDA's Real Income Statement
- 5Industry margin profiles — your reasonable-range reference
- 6The margin stack — formulas and what each tells you
- 7Where to see this on the platform
- 8Summary