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Topic 2.4: Deep Dive: The Income Statement
Learn to read a company's income statement like a pro. Our simple guide for value investors breaks down revenue, gross profit, operating income, and net income to reveal a business's true profitability.
Milan Reichl
June 18th, 2025 • Reading Time: 11 minutes
Deep Dive: The Income Statement
Welcome back, relentless investor! In our last lesson (Topic 2.3), we dissected the Balance Sheet – the financial skeleton of any company. You now know what a business owns and what it owes. You have the blueprint. But a blueprint alone doesn't win a race. A skeleton alone has no life.
Now, the real action begins. We are moving from the static photograph to the action-packed motion picture. We are entering the realm of the Income Statement (also known as the Profit & Loss statement). If the Balance Sheet shows what a company is, the Income Statement shows what it does. It's the story of a year of battles, victories, and defeats, told in the unflinching language of money.
This is where the contenders are separated from the pretenders. This is where we see if a founder's brilliant idea actually makes money or just burns through it. Is this company a relentless profit-machine or just a house of cards propped up by debt and hope? The answer to the one question that truly matters – "Is this business profitable?" – is hidden here. And we are about to show you how to decode the story from the top line (revenue) all the way down to the all-important "bottom line" (net income). Are you ready to distinguish the true winners from the losers?