A Marginal Income Statement expresses every component of an 📝Income Statement as a percentage of revenue, so that each line shows how many cents of every revenue dollar it consumes or leaves behind.
Revenue is set to 100%, and every other line is divided by revenue for the same period. The result reads as a stack of margins: gross margin after the cost of revenue, operating margin after operating expenses, and net margin after interest, taxes, and other items. Many statements also show an EBITDA margin between operating and net margin. Accountants call the same presentation a common-size income statement or vertical analysis. Because each line is scaled to revenue, periods of different size and companies of different scale can be compared directly, and a change in cost structure shows up as a change in percentage even when dollar amounts move with growth.