Bonus Material

Session 2: BONUS!

Revenue vs. Earnings: Apple

The next page shows an income statement for Apple Inc. at the end of the fscal year in 2021 from the company’s 10-K statement.

Apple Inc. (AAPL) posted a net sales number of $366 billion for the period. The company’s revenue number represented a 33% top-line growth rate from the same period a year earlier.

After recording revenue, Apple needs to deduct all expenses associated with running the business. This includes deducting from revenue cost of sales, operating expenses, other expenses and provisions for income taxes.

All these costs reduce revenue to arrive at net income (earnings). Apple posted $95 billion in net income (earnings) for 2021, which was a 65% increase from the same period in 2020.

NOTES

• Revenue is the amount of money a company brings in from its business activities, such as from the sales of goods and services.

• Revenue is referred to as “top line” because companies list their revenue at the top of their income statement.

• Revenue is the income a company generates before deducting expenses.

• Earnings, on the other hand, represents the proft a company has earned; it is calculated by subtracting expenses, interest and taxes from revenue.

• In order to evaluate a company’s performance, it’s important for investors to take into consideration both revenue and earnings.

DIVERSIFICATION:

In general, investing in a mutual fund is less risky than investing in a single stock because mutual funds ofer a way to diversify.

Diversifcation means spreading your risk by spreading your investments.

With a single stock, all your eggs are in one basket. If the price falls when you sell, you lose money.

With a mutual fund that invests in the stocks of dozens (or even hundreds) of companies, you lower the chances that a price decline for any single stock will impact your return.

Diversifcation generally may result in a more consistent performance in diferent market conditions.

STUDENTS! BE SURE TO TAKE THE RTSWS CAREER QUIZ THEN REGISTER ON OUR INTERNSHIP & JOB PORTAL!

The RTSWS Internship & Job Portal is THE resource for RTSWS students and alumnae seeking internships and job opportunities in fnance, economics and related felds.

www.rockthestreetwallstreet.com/career-quiz

www.rockthestreetwallstreet.com/internship-job-portal