L3Harris

Understanding these terms

Plain-English explanations of each figure in the table above, and what a beginner typically looks at. These are educational descriptions only, not advice.

Revenue

The total money a company earned from its core business during the period, before subtracting any costs. The US equivalent of "Sales" and often called the "top line".How a beginner reads it: Look at the multi-year direction and consistency rather than a single figure. A beginner often asks: is revenue growing, flat, or shrinking, and is the pattern smooth or lumpy? Pair it with profit — growing revenue with shrinking profit is worth understanding further.

Cost of Revenue

The direct cost of producing the goods or services that were sold — materials, direct labour, and manufacturing. It does not include sales, admin, or research costs.How a beginner reads it: A beginner compares this to revenue to sense how much it costs the company to make what it sells. The gap between revenue and cost of revenue is gross profit; a stable or widening gap over time is something readers often note.

Pretax Income

Earnings after all costs, interest, and depreciation but before income tax. The US equivalent of "Profit before tax".How a beginner reads it: A beginner compares pretax income across years to judge underlying earnings without the noise of changing tax rates. A widening gap between operating and pretax income often points to rising interest or other charges.

Income Tax

The income tax charge for the period, subtracted from pretax income to arrive at net income.How a beginner reads it: A beginner reads this together with pretax income to sense the effective tax rate. A sharp change in one year is worth a second look, as it may not repeat.

Net Income

The final profit after all expenses, interest, and taxes — the US "bottom line". Equivalent to "Net Profit".How a beginner reads it: A beginner watches the trend over several years and whether it is backed by the core business. Comparing net income to operating income shows how much financing and tax took out.

Interest Expense

The amount paid to lenders for borrowed money during the period. The US-statement equivalent of "Interest".How a beginner reads it: A beginner looks at how comfortably operating profit covers interest. The smaller interest is relative to operating earnings, the more breathing room the company has.

Depreciation & Amortization

A non-cash charge spreading the cost of physical assets (depreciation) and intangible assets like patents or goodwill (amortization) across their useful lives.How a beginner reads it: A beginner treats this as an accounting expense, not a cash payment. It is one of the main reasons operating cash flow can be higher than net profit.

EPS (Diluted)

Earnings Per Share counting all shares that could exist if options and convertibles were exercised — a fuller, more conservative per-share profit figure.How a beginner reads it: A beginner prefers the diluted figure because it assumes the largest realistic share count, so it does not flatter the per-share number. Tracking it across years shows real per-share progress.

Operating Income

The profit from a company's core operations after operating costs, but before interest and tax. The US equivalent of "Operating Profit".How a beginner reads it: A beginner reads this as the earning power of the business itself, before the effects of debt and taxes. Comparing the trend across years is usually more informative than the single latest value.