The Income Statement

What it is

A summary of revenue, expenses, and profit over a period (usually a quarter or year).

Key lines

• Revenue — the top line; growth here is what scales a business.
• Gross profit — revenue − cost of goods sold; reflects pricing power.
• Operating income — gross profit − operating expenses; the core profitability.
• Net income — what's left after interest and tax; flows to retained earnings or dividends.

Margins

Margins (gross, operating, net) tell you whether a business has pricing power and operational discipline. Compare margins to peers and to the company's own history.

How Cowry uses it

Net margin and revenue growth feed two of the five Quality Framework factors: Long-Term Prospects (revenue growth) and Management (net margin paired with ROE).