Income statement metrics. We should look at the individual components of the income statement for trends. Sales growth should be broken down in as much detail as possible. Equity research reports are helpful in getting into some of the detail, like price and volume, as well as various divisions. Most annual reports will also give breakdowns by geography and sometimes by product line or division. It also helps to know if there are any significant customer concentrations. This might come up in the MDNA or in the risks discussion at the beginning of the annual report. For operating costs, it is helpful to understand the fixed versus variable costs, which will give us a sense of the operational leverage a company has. Commodity and FX risk is important, as well. Also, relationships with suppliers is important. For ratio, we would look at the gross profit margin. EBIT and EBITDA margins are also critical to monitor. They're also extremely helpful in forecasting and sensitizing the numbers, which we'll see in a later module. Interest payments are hugely significant in the way they are measured are in terms of having the earnings or cash flow to cover the payments. Here, we might see EBITDA over interest. There are also some variations on this formula and we will cover them also. Interest payments are hugely significant and the way that they're measured are in terms of having the earnings or cash flow cover the payments. Here we see EBITDA to interest. They're also many variations of this formula. In terms of covering the interest payments, this, of course, assumes that EBITDA is equal to cash flow, which, as we have discussed, is not the case. Therefore, often we see other cash flow based metrics, like FFO, or funds from operations, coming into play. These can be derived from the income statement, but are more frequently associated with the cash flow statement, so we will deal with them when we cover cash flows. In terms of EBITDA, it seems like a bit of a bait and switch. We talk about the importance of EBITDA and then we spend much time learning how to calculate it, but then we keep adding the caveat that it can be misleading. As EBITDA has grown in use, it has been misused and misunderstood, so we need EBITDA because it is a well-understood and easily referenced metric. As such, loan agreements and credit or offering memorandums are full of EBITDA. However we use it, EBITDA must be clearly defined. That having been said, almost everybody has their own definition of it. So whether you're working internally or dealing with other banks or clients, we need to make sure we're all on the same page with the definition of EBITDA. No matter how EBITDA is designed, it, again, is only a proxy for cash flow and not the actual cash flow. What it ignores are working capital changes, CapEx, and taxes. Now, in lower tier credits, which are often smaller companies, EBITDA is much more useful and this is why it is such a trustee anchor in LBO transactions and analysis.