Income information
Income statement
| term | description | formula |
|---|---|---|
| Total Interest Income | The amount of interest that has been earned during a specific time period. | |
| Net Interest Income | The difference between the revenue that is generated from a bank's assets and the expenses associated with paying out its liabilities. | Total Interest Income − Interest expense |
| Premiums | The payments received by an insurer to provide coverage under insurance plans. | |
| Revenue | Total revenue. All earnings from regular business transactions, including net sales, interest or dividends earned from investments in other companies, for a given period of time. For banks, it's the total net revenue, being the sum of net interest income and total noninterest revenue. | |
| Cost of Revenue | The total cost of manufacturing and delivering a product or service. | |
| Gross profit | The difference between revenue and thePcost of making a product or providing a service, before deducting overhead, payroll, taxation, and interest payments. | Revenue − Cost of revenue |
| Research & Development | The investigative activities a business conducts to improve existing products and procedures or to lead to the development of new products and procedures. | |
| Selling General & Administrative expenses | The sum of all direct and indirect selling expenses and all general and administrative expenses of a company. | |
| Operating Expenses (OpEx) | The costs associated with a company's main operating activities and which are reported on its income statement. For banks, it's the total noninterest expenses. | Total Operating Expenses − Cost of revenue |
| Unusual expense (income) | The sum of purchased R&D Written-Off, restructuring charges, litigation, impairment, gain/loss on sale of Fixed Assets and any other unusual expense or income. | |
| Total Operating Expenses | All Operating Expenses including cost of goods sold (COGS). | |
| Operating Income | The amount of profit realized from a business's operations after taking out operating expenses - such as cost of goods sold (COGS) or wages - and depreciation. | Gross Profit − Operating Expenses (OpEx) |
| Normalised Operating Income | Normalised Operating Income|Operating Income adjusted to remove the effects of seasonality and expenses that are unusual or one-time influences. | Revenue − Adjusted Operating Margin.10y avg |
| Adjusted Operating Income | The amount of profit realized from a business's operations after taking out operating expenses − such as cost of goods sold (COGS) or wages − and depreciation, where the operating expenses exclude R&D, other operating expenses and unusual expenses. Definition as used by Tobias Carlisle. | Gross Profit − min(Selling General and Administrative expenses + Depreciation and amortization, Operating Expenses (OpEx)) |
| EBITDA | Earnings Before Interest, Taxes, Depreciation and Amortization. Comparable to Cash Flow from Operations, except that EBITDA does not account for changes in working capital, as does Cash Flow from Operations. | EBIT + Depreciation and amortization |
| EBITA | Earnings Before Interest, Taxes and Amortization measures a company’s full profitability before reducing it by interest, taxes and amortization considerations, and so is useful for calculating a company’s internal efficiency or profitability ratio. | EBIT + Amortization |
| EBIT | Earnings Before Interest and Taxes An indicator of a company's profitability, calculated as revenue minus expenses, excluding tax and interest. EBIT also includes non-operating income that the company generates. |
Income before tax + Interest expense |
| Normalized EBIT | EBIT adjusted to remove the effects of seasonality and expenses that are unusual or one-time influences. | Revenue × EBIT margin.3y avg |
| Adjusted EBIT | Normalized EBIT adjusted for Research & Development and Selling General and Administrative expenses. | Normalized EBIT + 0.25 Research & Development + 0.25 Selling General and Administrative expenses |
| Other Income (Expenses), Net | Consists primarily of gains and losses on sales of marketable securities, foreign currency transaction gains and losses, and other losses. | |
| Interest expense | The cost incurred by an entity for borrowed funds. | |
| Operating Income After Interest | A company’s operating income after interests are paid. | Operating Income − Interest expense |
| Adjusted Operating Income After Interest | A company’s adjusted operating income after interests are paid. | Adjusted Operating Income − Interest expense |
| Policyholder benefits and claims incurred | The amounts paid to policyholders under the coverage of policies. | |
| Total benefits, claims and expenses | Policyholder benefits, claims incurred and expenses related to the insurance business. | |
| Income before tax | Financial performance calculated as revenue minus expenses, excluding tax | Earnings Before Interest and Taxes − Interest expense |
| Income tax expense | The amount of expense that a business recognizes in an accounting period for the government tax related to its taxable profit. | |
| Tax rate | The percentage at which a corporation is taxed. | Income tax expense ÷ Income before tax |
| Adjusted Net Operating Profit After Tax (NOPAT) | Net Operating Profit After Tax adjusted for Research & Development amortization. | Net Operating Profit After Tax (NOPAT) + R&D Amortization |
| Net Operating Profit After Tax (NOPAT) | A company's potential cash earnings if its capitalization were unleveraged – that is, if it had no debt. | Operating income × (1 − Tax rate) |
| Normalised Operating Income after tax | The result of applying tax rate to the Normalised Operating Income. | Normalised Operating Income × (1 − Tax rate) |
| Adjusted income after tax | Result of applying tax rate to the adjusted EBIT. | Adjusted EBIT × (1 − Tax rate) |
| Adjusted Earnings | Net income adjusted for Research & Development amortization. | Net income From Continuing Operations + R&D Amortization |
| Net income from continuing operations (IAT) | The after-tax earnings that a business has generated from its operational activities. Before deduction of net income to non-controlling interests. | |
| Net income from discontinuing operations | Represents the after tax gain or loss on sale of a segment of business and the after tax effect of the operations of the discontinued segment for the period. | |
| Consolidated income | The portion of profit or loss, net of income taxes which is attributable to the consoldated entity, before the deduction of net income to non-controlling interests. | Net income from continuing operations + Net income from discontinuing operations |
| Net income to non-controlling interests | The portion of the net income that is attributable to the parent company's shareholders. | |
| Net income | Net income after the deduction of net income to non-controlling interests, before the deduction of preferred dividends. | Consolidated income − Net income to non-controlling interests |
| Preferred dividend | A dividend that is accrued and paid on a company's preferred shares. | |
| Earnings Per Share (EPS) | Also Net Income Available for Common Shareholders. The portion of a company's profit allocated to common shares, if all convertible securities were exercised (diluted) and adjusted to remove unusual or one-time influences (normalized). | (Net income − Preferred dividend) ÷ Total Common Shares Outstanding |
| Earnings Per Share (EPS) estimate x days ago | x Days ago average estimate of EPS. | |
| Earnings Per Share (EPS) estimate change | Change from a former Earnings Per Share estimate to the latest. | Earnings Per Share (EPS) estimate ÷ Earnings Per Share (EPS) estimate x days ago |
| Residual Income | The income generated by a firm after accounting for the true cost of its capital. | Earnings Per Share − Equity charge |
| Traditional Gross Dividend | Payments made to shareholder members. Gross value. Common Stock Primary Issue. Preference dividend and special dividend are not included. | |
| Net Dividend | Payments made to shareholder members. Net value. Common Stock Primary Issue. Special dividend included. | |
| Change to Retained Earnings | A company's profits, after dividend payments on a period. | EPS − Traditional Gross Dividend |
| Cash Flow / Earnings | Compares Cash Flow Per Share with reported EPS. | CCFAT ÷ Earnings Per Share |
| Cash Flow based Aggregate Accruals | Measure of aggregate accruals, using the Statement of Cash Flows. | Net income From Continuing Operations − (Cash Flow from Operations + Cash Flow from Investing) |
| EPS revisions up | Positive EPS estimate revisions during last 30 days by analysts. | |
| EPS revisions down | Negative EPS estimate revisions during last 30 days by analysts. | |
| EPS revisions ratio | Measures the net sentiment of analysts regarding a company's earnings prospects based on EPS revisions over the last 30 days. | (EPS revisions up − EPS revisions down) ÷ Number of analysts |
| Earnings surprise | The difference between the reported earnings and the expected earnings of an entity. | (Earnings Per Share − expected Earnings Per Share) ÷ expected Earnings Per Share |
| Economic Value Added | An estimate of a firm's economic profit, or the value created in excess of the cost of capital. | Net Operating Profit After Tax − Capital employed × WACC |
Quality of earnings
Refers to the amount of earnings attributable to higher sales or lower costs rather than artificial profits created by accounting anomalies such as inflation or inventory.
| term | description | formula |
| Cash Sales | Sales in which the payment obligation of the buyer is settled at once. | Revenue − Accounts receivables.1y diff |
| Cash revenue adjustment | Delivered goods or services that are not paid at the moment minus undelivered goods or services that are paid up front.. | Accounts Receivables − Deferred revenue |
| Free Cash Flow / EBITDA | Provides a comparison between the cash a company generates and the earnings before certain accounting deductions. | Free Cash Flow to the Firm ÷ EBITDA |
| CF / EPS | Compares Owner Earnings with reported EPS. | Owner Earnings ÷ EPS |
| Cash Conversion Ratio (CCR) | Ratio to determine the quality of a firm's reported earnings. When the ratio rises above 1, it is indicative of a strong ability to fund its activities through generation of operating cash flow. | Cash Flow from Operations ÷ Net income from continuing operations (IAT) |
| Accruals to Total Assets | Capture where accounting profits are not supported by cash profits. | (Net income From Continuing Operations − Cash Flow from Operations ÷ Total Assets.yr avg |
| Sloan ratio | Richard Sloan was first to document what is referred to as the accrual anomaly. Shares of companies with small or negative accruals vastly outperform (+10%) those of companies with large ones. | Cash Flow based Aggregate Accruals ÷ Total Assets.yr avg |
| Absolute Sloan ratio | Absolute value of sloan ratio. | abs(Sloan ratio) |
| NOA Accruals to Total Assets | Capture where accounting profits are not supported by cash profits, using changes in Net Operating Assets. | Net Operating Assets'.1y diff ÷ Total Assets.yr avg |
| RSST Accruals to Total Assets | Capture where accounting profits are not supported by cash profits, using RSST accruals. | RSST Acruals ÷ Total Assets.yr avg |
| Soft Assets to Total Assets | The proportion of a company's assets that are made up for soft assets. | Soft assets ÷ Total Assets |
| Payout ratio | The amount of earnings paid out in dividends to shareholders. | Traditional Gross Dividend ÷ Earnings Per Share (EPS) |
| Owner Payout ratio | How much cash as a percent of Owner Earnings the company is paying its investors. | Traditional Gross Dividend ÷ Owner Earnings' |
| Dividend Cushion ratio | Helpful tool to cushion your dividend growth or income portfolio against potential dividend cuts. | (Net cash + Free Cash Flow.5y est) ÷ Dividend Paid.5y est |