Income Statement Decode for Investors

Description
By the end of reading the document, you shall be able to comprehend the following aspects:
Terminologies used for income statement
Components of Income Statement
How to read the following aspects in an income statement and compare it with competitor financial statement to come to quantitative judgement of health of the company:
Gross Profit and its importance in competition comparison
PAT/EAT
Difference between earnings & revenues - various terminologies used
MEASUREMENT OF EARNINGS -EPS and its importance - how to calculate EPS, why is EPS important, key points to note in EPS
Depreciation and its play in evaluating company financial health - methods on calculating depreciation, key aspects to understand in depreciation
Amortization - meaning, effect on tax burden,
Revenue - significance of revenue in inference about company
How do companies manipulate sales? - 6 methods in which company can manipulate the sales figures in the financial statements
Six Point Checklist for investing decision - key checks to be done using the income statement in order to ensure you are investing in the right stock
a. history of increasing revenues
b. Revenues increasing at par or above the other competitors
c. unique product-line that will sell fast?
d. unique branded product to sell?
e. revenues growing moderately but receivables showing a sudden jump, that’s a red flag!
d. Price/sales ratio