How to read the income statement
· beginner
Automated material · TradeAlmanac editorial deskDraft prepared by a language model from our stored data; not reviewed by an editor.
An income statement is read from top to bottom, and each line answers a narrower question than the one above it.
Revenue
The first line. How much the company sold.
523 100 000 000
Operating profit
Revenue less cost of sales and operating expenses. It answers whether the company earns money doing what it does — before any question of debt or taxes.
77 100 000 000
What sits between operating and net profit
Interest on debt, exchange differences, share of profit from associates, asset impairments, tax. This is where the items live that turn an excellent operating year into a loss-making one — and the reverse.
Between these two lines sits EBITDA — profit before interest, tax, depreciation and amortisation. For the same LUKOIL it equals 1 049 300 000 000. The measure is convenient for comparing companies with different debt loads, and that is exactly why it stays silent about debt: the debt has not gone anywhere, it has simply been moved outside the bracket.
Net profit
61 800 000 000
Dividends are paid out of it and P/E (price to earnings) is computed from it. It is the best known and the most easily distorted figure in the accounts.
A common-sense check
Compare the trajectories of revenue, operating profit and net profit. If they diverge, an explanation has to exist in the notes. If it does not, that is itself the conclusion.
Draft prepared by a language model from our stored data; not reviewed by an editor.
Model: claude-opus-5
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