Equity · Core
Income Statement
The income statement is the period’s revenues minus expenses — accrual earnings, not cash.
Definition
It reports revenue, COGS, opex, D&A, interest, tax, and net income over a period under accrual rules. Non-GAAP variants add back stock comp, amortization, or ‘one-time’ items. Cash can diverge for years.
Why it matters
Most equity multiples sit on an earnings number. If the earnings are accrual theater, the multiple is theater too.
Case
A firm books revenue on long contracts and delays cash collection. EPS rises; working capital absorbs the cash. The income statement cheered; the cash-flow statement did not.
How to read it
Reconcile net income to operating cash flow. Persistent gaps need a working-capital or capitalization story, not a multiple.
No query has been run yet. Which is tragically normal for most knowledge systems, but we are trying to evolve past decorative databases.