To The Moon

Similarity of company’s financial statement and our income statement

A lot of people may feel financial statement is difficult to understand. As a lay person, we really need to know how to read financial statement before we start our investment journey.

Break down complicated things and we will become an expert:

Sample Income Statement

Revenue

- Cost of goods/services

= Gross Profit

- GA expenses

= Operating Profit

+ Sales of assets

- Interest charge

= profit before tax

- Taxes

= Net profit

Revenue : Salary

Cost of goods and GA expenses : our daily, weekly and monthly expenses

Sales of assets :

Eg, sale of property and other assets

Interest charge : if we borrow money for renovation, housing or for business

Taxes : Income taxes that we need to pay because of our income

*Just be careful that taxes are different between company and ownself

Net Profit : Net income

If you discovered that you have a negative number for your net income, you know that you are already in trouble