Understanding Stocks

98 UNDERSTANDING STOCKS
Florida Star Consolidated Income Statement
(in thousands)
2002 2001 2000
SALES REVENUES
Net Sales 2,895 2,682 1,654
Services 1,764 1,456 789
Hardware 1,591 1,101 961
Software 897 763 690
—————— —————— ——————
Total Sales Revenue: 7,147 6,002 4,094
OPERATING EXPENSES
Cost of sales 2,324 2,643 1,477
Advertising and promotion 987 877 654
Research and Development 104 91 58
Other operating expenses 78 65 29
—————— —————— ——————
Total Operating Expenses: 3,493 3,676 2,218
Earnings before income tax: 3,654 2,326 1,876
Provision for income tax: 78 67 43
—————— —————— ——————
Net Income: 3,576 2,259 1,833
EARNINGS PER SHARE
Earnings per share
of common stock .99 .87 .76
Figure 10-1
revenue is increasing when compared to that in earlier years. For example,
if you are a growth investor, look for companies whose revenue is
increasing by 15 percent or more each year.
The next section of the income statement gives operating expenses.
These are the costs of doing business, such as salaries, advertising,
training employees, and buying new computers, to name a few. There is
usually also a line for research and development (R&D), which is the
cost of developing and investing in new products.
The next three sections of the income statement describe the company’s
income. Have you heard someone say, “What is the bottom
line?” This refers to a company’s net income (which happens to be on