If we’re looking at an income statement for the first time, there are really two parts that you should key in on. The first one is gross margin. Gross margin is how much money we’re making on our products and services. The second is Operating Margin. Operating margin is subtracting our operating expenses from our gross margin, and then turning that number into a percent. These numbers give us key insights into how much money our company is making (or losing). This is important! If you’re losing money, this may not be the right business to get into. So gross margin and operating margin are key metrics to understand to know the performance of any company.

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