The income statement is easy to understand, and it is clear at a glance whether it is a loss or a profit. The most important concept here is after-tax net profit, which corresponds to the money saved in the personal income statement, but there are also differences. After-tax net profit only represents the concept of how much money the company earned or lost during this period. The amount of net profit is not cash, but the contract amount. Just because a company's income statement shows that it is very profitable doesn't mean it has a lot of money on hand.
The analysis of income statement should start with the following key points: gross profit margin, net interest rate and expense structure. See how enterprises can develop these three ratios to better benefits.
Gross profit margin = operating income-operating cost. Companies with high gross profit margin can have better development space. Generally, only industry leaders will have the right to speak and master higher gross profit margin.
After-tax net profit (excluding income tax) is equal to sales revenue minus operating expenses and production costs. There are only three ways to improve after-tax net profit: increase sales revenue, reduce operating expenses and reduce production costs. Which of these three is more important, open source or throttling? Choose one of the three, which one is preferred?
You can't have your cake and eat it, and different companies will have different considerations. If you choose to increase sales revenue, the meeting will not be capped. But if you choose cost control, it will not drop to zero anyway. Once the transition control is carried out and inferior raw materials are used, the company's image will eventually be hurt.
Similarly, reducing operating expenses and excessive control will hurt the morale of employees within the company. Therefore, to increase the net profit, it is best to focus on sales revenue, and only properly control costs and expenses.