By Findley's Finance · Last reviewed: September 2026

Findley’s Finance

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By Findley's Finance · Last reviewed: September 2026

For educational use only. Not financial or tax advice. Consult a licensed advisor before making major decisions.

Action: Analyze Key Growth Metrics

A practical exercise to apply what you've learned by calculating key metrics from a real income statement.

The Goal: From Reading to Analyzing

You've learned how to read an income statement. Now, become an analyst. Growth is not one number — it is three: how fast the business is expanding (revenue), how fast profits are growing (net income), and how much of that growth actually reaches you per share (EPS). This exercise walks you through all three.

Grab the same notebook or document you've been using to analyze your chosen company. You are building a complete dossier on this business, and you will use these notes later to form a more informed thesis.

Worked Example: Example Corp.

Illustrative figures — not a real company. Watch how the three growth numbers tell different parts of the story.

Metric	Prior Year	Recent Year	Calculation	Verdict
Revenue (top line)	$500,000	$550,000	($550k ÷ $500k − 1) × 100% = +10.0%	Solid. Customers are buying 10% more.
Net income (bottom line)	$57,600	$68,000	($68k ÷ $57.6k − 1) × 100% = +18.1%	Faster than revenue — but check quality: $50k of this came from a one-time asset sale.
Diluted shares outstanding	50.0M	48.5M	(48.5M ÷ 50.0M − 1) × 100% = −3.0%	Share count shrinking. Each remaining share owns a bigger slice of the company.
Earnings per share	$1.15	$1.40	($1.40 ÷ $1.15 − 1) × 100% = +21.7%	EPS grew faster than net income (+18.1%) because buybacks reduced the share count. That is the number that actually lands in your pocket.

The story: revenue grew 10% and EPS grew 22% — but $50,000 of the $68,000 net income was a one-time asset sale. Strip that out and the core business earned roughly $35,000 pre-tax, down sharply. Headline growth masked a deteriorating business. Always ask what drove the number.

Your 5-Step Analysis Task

Step 1: Open Your Chosen Company's Filing

Reopen the most recent Annual Report (10-K) or Quarterly Report (10-Q) you located in the 'Locate Financial Statements' exercise. Work with the two most recent periods reported.

Step 2: Calculate Top-Line Growth

Find the 'Total Revenue' or 'Total Net Sales' line. Revenue growth tells you whether customers want more of what the company sells. A company that cannot grow revenue must grow profits by cutting costs — which has a floor.

((Current Year Revenue ÷ Previous Year Revenue) − 1) × 100%

Step 3: Calculate Bottom-Line Growth

Find the 'Net Income' line and compute the same percentage change. Then ask the quality question: did net income grow because the business improved, or because of a one-time gain, a tax benefit, or an accounting change? Strip out anything non-recurring before you celebrate.

((Current Year Net Income ÷ Previous Year Net Income) − 1) × 100%

Step 4: Calculate Per-Share Growth

Find the 'Diluted Weighted Average Shares Outstanding' line. A shrinking share count (negative change) means buybacks are working for you; a growing count means your ownership is being diluted. Then compute EPS growth — net income growth adjusted for the share count. EPS is what you actually own a slice of.

((Current Year Shares ÷ Previous Year Shares) − 1) × 100%

Step 5: Put the Three Numbers Together

The ideal pattern: revenue growing, net income growing at least as fast, and share count flat or shrinking so EPS grows fastest of all. Any deviation tells a story — find it. Revenue up but EPS flat? Dilution ate the growth. Net income up but revenue flat? Cost cuts, not a healthier business.

Synthesize Your Findings

After calculating these numbers, what story do they tell? Is the company growing sales and profits? Is it doing so while reducing the share count (a great sign) or by diluting existing shareholders (a red flag)? And is the profit growth real, or propped up by one-time items? Write a one-sentence conclusion based on your findings.

Your Template

Copy this table into your dossier and fill it in for your company.

Metric	Prior Year	Most Recent Year	Growth %	Your Verdict
Revenue
Net income
Net income (recurring only)
Diluted shares
Earnings per share

Ways People Get This Wrong

Celebrating net income growth without checking its source. One-time gains, tax benefits, and asset sales inflate the bottom line without improving the business.
Ignoring the share count. Net income up 20% with shares up 25% means your slice got smaller. Always finish at EPS.
Comparing one noisy year to another. If either year had unusual items, growth percentages lie. Normalize first, then compute.

Done Looks Like This

Your template table is filled in with your company's real numbers, including recurring-only net income.
You know whether EPS is growing faster or slower than net income — and why.
You wrote a one-sentence conclusion on the quality of the company's growth.

Check Your Understanding

Action: Analyze Key Growth Metrics · 0 of 4 answered

1 of 4Example Corp.’s net income grew 18.1% to $68,000 — but $50,000 of that was a one-time asset sale. What is the lesson’s conclusion?

2 of 4A company’s net income is up 20% but its share count is up 25%. What happened to your slice of the company?

3 of 4A company’s net income is rising but its revenue is flat. What does the lesson say is most likely going on?

4 of 4What is the lesson’s “ideal pattern” of growth?

Continue Your Journey

Now that you have hands-on experience analyzing an income statement, you're ready for the next lesson.

Return to the Invest Like a Pro Roadmap