Use AI to decode balance sheets, income statements, and cash flow statements — from fundamentals to comparative analysis.
Before
Acme Corp income statement — Revenue up 27% to $12.4M but net income dropped from $600K to $100K...
After
FINANCIAL STATEMENT EXPLAINED: Acme Corp Income Statement FY 2025 Audience: Non-financial manager | Focus: Red Flags THE BIG PICTURE Revenue grew 27% ($9.8M → $12.4M) — great top line. But net income dropped 83% ($600K → $100K). The company is growing revenue but spending even faster. RED FLAGS 1. Gross Margin Compression FY24: 60.2% → FY25: 58.1% COGS grew 33% while revenue grew 27%. It's costing more to deliver each dollar of revenue. Ask: Are we discounting? Are supplier costs rising? 2. Sales & Marketing Explosion S&M grew 55% ($2.0M → $3.1M) while revenue grew 27%. Each new dollar of revenue cost more to acquire. The sales efficiency is declining. 3. Operating Income Collapse $0.8M → $0.2M (75% drop). The company is barely profitable at the operating level despite strong revenue growth. WHAT THIS MEANS IN PLAIN ENGLISH Acme is growing fast but burning through its margins. If these spending trends continue without revenue accelerating, the company could be unprofitable within 1-2 quarters. QUESTIONS TO ASK • Why did COGS grow faster than revenue? • What's the customer acquisition cost trend? • Is the R&D spend producing results that will show up next year? • What's the plan to improve operating margins?
Tip
Include prior-year comparisons when available — trends tell a much more useful story than a single snapshot. Specify your audience so the explanation matches their financial literacy.
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