The most important parts in Statement os Operations is company's Sales or Revenue (выручка) and Net Profit (чистый доход).
Sales
If Sales go down it could be result of one-time event (fine, accidental loss of assets) or company's transformation if it change business model. It both case change in Sales could be tolerable or even positive. However, company could loose it's customers because of technology shift or other events. In this case companies shares are not so lucrative.
The following factors could impct Sales:
- Launch a new project - it's a good idea to buy manufacturing company's shares if it launch a new project. Sales will go up as a stock price. It's good to know for such companies how it depends on it's factories. In case of factory loss it could significantly decrease sales.
- Launch a new project or service
- Other company acquisition
- Expansion - company could go abroad and get customers in other regions. In this case business becomes more diverce.
Expences
- Cost of goods sold / Cost of revenue (себестоимость) - it's an expences that company pays for producing goods (salary, materials, transportation). To decrease expences company could buy material producer (vertical integration). In this case it would not need to pay extra for materials.
To get gross income (валовая прибыль) you need to substract себестоимость from sales
Operating expenses
It's what company on top of the production expences. There are three cagegories of such expences.
- General and admin expenses (Административно-хозяйственные расходы) - it's money company pays for doing business. Salary for managment, bank commissions, office rent and so on
- Selling and marketing expenses (Коммерческие расходы) - expences for marketing (marketologs salary, expences for advertising and premium services)
- Research and development (R&D) expenses (Расходы на НИОКР) - expences for developing new projects and services
Operating income (Операционная прибыль) - is a gross income minus operating expences
Non-cash expenses
- Stock-based compensation (Выплаты по акциям) - the practice of rewarding employees with stock options that will vest, or become available for purchase, at a later date
- Depreciation and amortization (Амортизация) - the practice of spreading an intangible asset's cost over that asset's useful life.
- Loss from impairment (Убыток от обесценения) - when company want to decrease value of some assets (goodwill, overvalued bulding) it could show this amount in current category
Net income (Чистая прибыль) - is an operating income plus non-cash expensesexpences
Net income shows how much company have after all expences, taxes and paid interest. Part of net income could be paid as dividents or invested in business. In last case shareholder would profit becase of market price growth.
One-time income like selling expensive building and one time spending like fine should be excluded from consideration
Non-controlling interest (Неконтролирующая доля)
profit from subsidiary companies that owns by other investors. According to standards, company should show 100% of profit from subsidiary business. However company could own only portion of business. Profit from non-controlled shares is shown under current item
Earnings per share
- Basic earning per share (базовая прибыль на акцию) - is a net income divided on amount of issued stocks averaged along the year.
- Diluted earning per share (разводненная прибыль на акцию) - is a net income divided on amount of stock with account of additions shares in future ussued as a result of bonds conversion or option programs