Income Statement: How to Read, Key Metrics

What Is an Income Statement?

By Motley Fool Staff – Updated Aug 8, 2025 at 9:10 PM

Key Points

Income statements reveal a company's revenues and expenses, aiding investment analysis.
Key metrics like gross profit margin and EPS inform on company profitability and health.
Analyzing changes in income over time helps identify financial trends and efficiency.

Along with the balance sheet and cash flow statement, the income statement is one of the three most important financial documents that investors can use to analyze a company's prospects. An income statement simply displays the company’s revenues and expenses, providing investors with an array of information that can be used to gauge its value.

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A graphic defining and explaining income statements. — Image source: The Motley Fool

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Apple, Fourth Quarter 2022
				12/31/2022	12/25/2021
Net sales
	Products			$ 96,388	$ 104,420
	Services			$ 20,766	$ 19,516
		Total net sales		$ 117,154	$ 123,936

Cost of sales
	Products			$ 60,765	$ 64,309
	Services			$ 6,057	$ 5,393
		Total cost of sales		$ 66,822	$ 69,702
			Gross margin	$ 50,332	$ 54,243

Operating expenses
	R&D			$ 7,709	$ 6,306
	Selling, general & admin			$ 6,607	$ 6,449
		Total operating expenses		$ 14,316	$ 12,755

Operating income				$ 36,016	$ 41,488
Net income				$ (393)	$ (247)
EBT				$ 35,623	$ 41,241
Taxes				$ 5,625	$ 6,611
Net income				$ 29,998	$ 34,630

EPS				$ 1.89	$ 2.11

Keep in mind that although an income statement contains a trove of valuable information for investors, it’s not the only game in town. Use income statements, along with balance sheets and cash flow statements, to compare your current or potential investments to similar companies, and always -- always -- remember that you should use the data to figure out what makes sense for you over the long term as a buy-and-hold investor.

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The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.