The Income Statement

What this video covers

• Why the income statement shows performance over a period while the balance sheet shows position at a moment in time
• The waterfall from revenue (top line) down to net income (bottom line), and the exam vocabulary traps with those informal names
• How EBITDA, EBIT, and EBT function as checkpoints, and how to calculate them working downward or backward up from net income
• Why EBITDA approximates operating cash flow but is definitively not actual cash flow from operations
• Why interest expense is a financing cost subtracted after EBIT, not an operating cost
• How basic earnings per share (EPS) uses only currently outstanding weighted average common shares
• Why fully diluted EPS is always equal to or lower than basic EPS, which securities dilute the denominator, and why fully diluted is the most conservative profitability figure