The three income-statement buckets are revenue, the costs of delivering that revenue, and the overhead of running the company. iBD uses them to connect the financial story to the CRO, COO and CFO responsibilities.
Read the operating story in order
| Bucket | What it means | The leadership question |
|---|---|---|
| Revenue | Sales recognized for the period under the company’s accounting policy. | CRO: what are we selling, to whom, at what price? |
| Direct costs or cost of goods sold (COGS) | Costs assigned to producing or delivering those sales. | COO: can we deliver the work at the planned quality and margin? |
| Selling, general and administrative expenses (SG&A) | Selling and company overhead outside the delivery costs above. | CFO, with the CEO and budget owners: what does it cost to support the plan? |
Revenue less delivery costs gives gross profit. Gross profit divided by revenue gives gross margin. The CFO keeps cost classification consistent; the leaders own the operating choices. A shared delivery cost still needs to be included once, even when it cannot be assigned directly to one revenue line.
These are the three operating categories used for teaching, not a claim that the complete Income Statement has only three lines. Depreciation, interest, tax and other items need their proper treatment before you reach reported net income. EBITDA and Normalized EBITDA require their own reconciliations.
Company performance and owner pay are different questions
Salary, distributions and capital gains describe how work and ownership reward you. Cash Flow Targets explains those personal income sources. They are not these three income-statement categories, and distributions are not an operating expense.
Use Milestone 10 to connect the statements and Milestone 19 to connect the results to leadership responsibilities.
Put the idea to work
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