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The income statement is one of the most important financial statements for investors and analysts, as it provides a comprehensive overview of a company’s revenues and expenses. The major components of an income statement include sales or gross revenue, cost of goods sold (COGS), operating expenses (OPEX), net income before taxes, and net income after taxes.
Sales/gross revenue generally refers to the total amount a business earns from providing services or selling products over a certain period. COGS are the direct costs associated with producing these goods/services while OPEX includes all other costs such as general administrative expenses and selling & marketing expenses.
Net income before taxes measures how profitable a company is before taking into account any applicable tax deductions while net income after taxes shows how much profit was actually made by subtracting out any relevant taxes owed. By analyzing changes in each component over time, investors can get an idea of where growth is coming from which can be useful when making decisions about whether or not to invest in a particular stock or bond.