Learn · Explainer
How to read an income statement
From revenue at the top to net income at the bottom, one line at a time, using Apple's latest 10-K.
The short answer
The income statement shows a company's revenue for a period and the costs taken out of it, step by step, down to net income at the bottom. Each step has a name: gross profit, operating income, income before taxes and net income. In fiscal 2025, Apple turned $416.2B of revenue into $112.0B of net income.
Apple's income statement, line by line
| Apple, fiscal 2025 | Amount | Share of revenue |
|---|---|---|
| Revenue (net sales) | $416.2B | 100.0% |
| − Cost of sales | $221.0B | 53.1% |
| = Gross profit | $195.2B | 46.9% |
| − Research and development | $34.5B | 8.3% |
| − Selling, general and administrative (worked out) | $27.6B | 6.6% |
| = Operating income | $133.1B | 32.0% |
| − Other income and expense, net (worked out) | $321M | 0.1% |
| = Income before taxes | $132.7B | 31.9% |
| − Income taxes | $20.7B | 5.0% |
| = Net income | $112.0B | 26.9% |
Linked lines are Apple's reported figures. "Worked out" lines are the difference between the reported lines around them; Apple's statement shows them as lines of their own.
Source: Apple 10-K for fiscal 2025, filed Oct 31, 2025
What each line means
- Revenue is what customers paid for products and services in the period. It's also called net sales or the top line.
- Cost of sales is the direct cost of what was sold: parts, manufacturing, and the cost of delivering services.
- Gross profit is revenue minus cost of sales. Gross, operating and net margin turns it into a percentage.
- Operating expenses are the costs of running the business that aren't tied to each sale: research and development, and selling, general and administrative costs (marketing, sales staff, offices, executives).
- Operating income is gross profit minus operating expenses: the profit from the business itself.
- Other income and expense collects interest earned and paid, investment gains and losses, and foreign currency effects.
- Income taxes are the tax expense for the year. Apple's was $20.7B on income before taxes of $132.7B, an effective tax rate of about 15.6%.
- Net income is what's left: the bottom line. Divided by the average diluted share count of 15.00B, it gives diluted EPS of $7.46. Earnings per share covers that step.
Where to find it
In a 10-K the income statement is in Item 8, Financial Statements, usually called the Consolidated Statements of Operations (Apple's name) or Consolidated Statements of Income. It shows three years side by side. Each 10-Q has one for the quarter and the year to date. The notes that follow explain the lines in more detail, and the MD&A (Item 7) has management's explanation of the changes.
Banks use a different layout
A bank doesn't have a cost of sales or a gross profit. Its income statement starts with two kinds of revenue: net interest income (interest earned on loans and securities minus interest paid on deposits and borrowing) and noninterest revenue (fees, trading and other income). JPMorgan Chase reported net interest income of $95.4B and noninterest revenue of $87.0B for fiscal 2025. Then come the provision for credit losses and noninterest expenses, before taxes and net income.
Source: JPMorgan Chase 10-K for fiscal 2025, filed Feb 13, 2026
The other two statements
The income statement is one of three main financial statements. The balance sheet shows what a company owns and owes on one date, and the cash flow statement tracks cash coming in and going out. Net income can differ a lot from the cash a business brings in; Free cash flow shows how, and Revenue vs. net income compares the top and bottom lines for 100 companies.
Common questions
What is on an income statement?
Revenue, the costs taken out of it, and the profit at each stage: gross profit, operating income, income before taxes and net income, followed by earnings per share. Apple's fiscal 2025 statement runs from $416.2B of revenue to $112.0B of net income. Source: Apple 10-K for fiscal 2025.
What is the difference between gross profit and operating income?
Gross profit takes out only the direct cost of what was sold. Operating income also takes out operating expenses such as research and development and selling, general and administrative costs. Apple's gross profit was $195.2B and its operating income $133.1B in fiscal 2025. Source: Apple 10-K for fiscal 2025.
Is the income statement the same as the profit and loss statement?
Yes. Income statement, profit and loss statement (P&L), statement of operations and statement of earnings are names for the same report.
What is an effective tax rate?
Income tax expense divided by income before taxes. It often differs from the headline corporate rate because of foreign profits, tax credits and one-time items. Apple's was about 15.6% in fiscal 2025. Source: Apple 10-K for fiscal 2025.
Why is there no gross profit line for some companies?
Banks, insurers and some service companies don't report a cost of sales, so there's no gross profit. Banks start from net interest income and noninterest revenue instead.
Disclosures
- Editor holdings
- The editor holds no position in any company named on this page. As of Oct 25, 2026.
- Compensation
- Nobody paid for this page. No affiliate links on this page.
- Sources
- Each company's own SEC filings, linked next to each number.
- Last updated
- Oct 26, 2026
General education, the same for every reader. Not a recommendation to buy, sell or hold any security, and it doesn't consider your situation.
More in Learn and Tools · Methodology & Disclosures explains where every number comes from.