Red Cat (RCAT)

The money customers paid, before any costs are taken out. Each bar is one quarter or, on the annual view, a full financial year; the last annual bar may be the trailing twelve months, which the footnote marks.

What good looks like. Growth that repeats, rather than one strong year carrying the chart, and a trailing twelve months keeping pace with the last full year.

If it rises or falls. Revenue is the hardest line to flatter, so a rise is the most trustworthy kind of growth. A fall puts pressure on every margin below it, because costs rarely come down as quickly as sales do.

What is left after every cost, including tax and interest. The bottom line of the income statement.

What good looks like. Profit growing at least as fast as revenue, which means the business is keeping more of each sale as it gets bigger.

If it rises or falls. Profit can move for reasons revenue cannot explain - a one-off charge, a tax change, a write-down - so a single sharp year is worth checking against the margin chart before reading it as a trend.

What survives at three points on the way down the income statement: after the direct cost of the product, after the cost of running the company, and after everything.

What good looks like. Margins that hold or widen as the business grows. The level itself varies enormously by industry, so the shape over time tells you more than the number.

If it rises or falls. A widening margin means pricing power or costs under control. A compressing one means the opposite, and it compounds: on large revenue, two points of margin is a great deal of profit.

One year of revenue, with each major cost taken out in the order the income statement takes it, ending at net profit.

What good looks like. No single step swallowing a surprising share, and a bottom line that survives all of them.

If it rises or falls. The largest step is where the business really spends its money, and it is the one to watch year to year: a step that grows faster than revenue is what margin compression looks like before it reaches the margin chart.

The same return as the card above, but every filed year, against a 10% line that stands in for what capital costs.

What good looks like. Years above the line, and a trend that is flat or rising rather than drifting down towards it.

If it rises or falls. A business earning above its cost of capital creates value by growing; one earning below it destroys value by growing. The 10% line is a convention, not a law, so read the distance from it rather than the crossing.

Total borrowings against cash on hand, with debt as a multiple of shareholders' equity, and how many times profit covers the interest bill.

What good looks like. Interest covered comfortably - roughly eight times or more - and debt that is not a large multiple of equity.

If it rises or falls. Debt is only a problem when it has to be repaid or refinanced in a bad year, so cover matters more than the amount. Rising debt with rising cover is a business borrowing to grow; rising debt with falling cover is the combination that ends badly.

What would be left for shareholders if every asset were sold at its book value and every debt repaid. Book value, in other words.

What good looks like. Equity growing as retained profits build up, unless the company is deliberately returning more than it earns.

If it rises or falls. Equity falls for two very different reasons: buybacks, which return money to you, and losses, which do not. The distinction is the whole story, and negative equity means liabilities now exceed assets, which makes debt-to-equity and return on equity meaningless rather than alarming.

Open-market buys and sells by the company's own officers and directors, from their Form 4 filings. Grants, option exercises and shares withheld for tax are excluded, because they are compensation rather than decisions.

What good looks like. Buying with their own money, which is the one insider action that is hard to explain away.

If it rises or falls. Selling is weak evidence: insiders sell to diversify, to buy houses, and on pre-scheduled plans set months ahead. Buying is stronger evidence, because there is only one reason to do it. The absence of any buying over a long stretch is itself worth noticing.