Financial Metrics Overview
A comprehensive guide mapping how a company transforms its top-line sales into core operating profits and
bottom-line earnings.
1. The Financial Pipeline Pictograph
This map illustrates how capital flows through the business matrix, detailing exactly what must be subtracted at
each step.
REVENUE (Top Line)
Total cash inflow from sales.
MINUS: Cost of Goods Sold (COGS)
MINUS: Operating Expenses (SG&A;)
EBITDA
Core operational profitability.
MINUS: Depreciation (Tangible Assets)
MINUS: Amortization (Intangible Assets)
OPERATING INCOME (EBIT)
Profit from core business actions.
MINUS: Interest Expenses
MINUS: Government Taxes
NET INCOME / NET PROFIT (Bottom Line)
Final leftover earnings for owners.
[ ■■■■■■■■■■ ]
100%
■
[ ■■■■■ ]
50%
■
[ ■■■■ ]
40%
■
[ ■■■ ]
30%
2. Financial Metrics Comparison Matrix
Metric
What It Represents
Standard Formula
Revenue
The full pot of incoming money generated from
selling products or services prior to any expense
breakdown.
Total Sales Volume × Price
EBITDA
Core operational strength. Strips out financing, tax
environments, and non-cash book charges to show
pure operational cash generation.
Revenue - Cash Operating
Expenses
Operating Income
(EBIT)
Profits earned from routine business operations,
incorporating asset wear and tear but before
financial capital costs.
EBITDA - Depreciation &
Amortization
Net Income / Profit
The ultimate bottom line. The remaining capital
available for shareholders after settling all liabilities,
debts, and taxes.
Operating Income - Interest Taxes