Reading Graphs Pt1: Turnover, Employees, Net Profit, Cost of Sales

The "Core Four": How to Read the Vital Signs of Any Business

When you are assessing a company—whether you are looking to work there, sell to them, or invest in them—you don't always need to get lost in complex ratios. Often, the story is hidden in plain sight within the four most basic charts: Employees, Turnover, Cost of Sales, and Net Profit.

Here is how to read these charts on our dashboard and what they tell you about the company's reality.

1. Employees (Headcount)

• What is it? This is a simple count of the full-time equivalent staff working at the company. While financial charts tell you the monetary size of the business, the Employee count tells you the operational complexity.

• How to read the chart

  • The Trajectory: You generally look for a smooth upward trend, which indicates sustainable growth.

  • The "Mountain" Shape: If you see a chart that rises steeply and then drops off (like the example in our data), it indicates a company that scaled up too fast and had to go through a restructuring or redundancy phase.

• How to use this information

  • For Job Seekers: Consistency is key. A flat or gently rising line suggests job security. A line that is dipping suggests the company is cutting costs—meaning hiring freezes or budget cuts could be in place.

  • For Sales/Prospecting: This helps you qualify the lead. If you sell enterprise software priced "per seat," you need to know if they have 500 staff or 4,000 staff to pitch the right price.

    
    

2. Turnover (Revenue)

• What is it? Turnover (or Revenue) is the total amount of money a company brings in from its normal business activities before any expenses are deducted. It represents the sheer size of their commercial activity and market demand.

• How to read the chart

  • The Direction: You are looking for growth. A steep upward curve indicates the company has found a "product-market fit"—customers want what they are selling.

  • Stability: If the line is flat, the business is in "maintenance mode." If it is erratic, their sales cycle might be unpredictable.

• How to use this information Use Turnover to gauge Market Relevance. If a prospective client or employer has rising turnover, it proves they are relevant in their sector. However, never look at it in isolation.

  
  

3. Cost of Sales

• What is it? Cost of Sales represents the direct costs strictly tied to the production of the goods or services a company sells. This isn't the rent or the marketing budget; this is the raw cost of doing business.

• How to read the chart

  • The Parallel: You should always look at this chart alongside Turnover. In a healthy business, this line should rise roughly parallel to Turnover.

  • The Squeeze: If Cost of Sales is rising faster than Turnover, the company is becoming less efficient—it is costing them more to deliver the same product.

• How to use this information

  • For Observers: This reveals the company's Margins. If the Cost of Sales is very high (close to the Turnover figure), the company operates on "thin margins."

  • Why it matters: Low-margin businesses are highly price-sensitive. If you are selling to them, expect them to negotiate hard. If you are joining them, expect tighter budgets for perks and bonuses compared to high-margin tech or service firms.

4. Net Profit

• What is it? Net Profit is the "bottom line." It is what remains after the company has deducted all costs—including taxes, interest, staff, and operations—from its turnover. This is the ultimate measure of sustainability.

• How to read the chart

  • The Zero Line: The most important visual on the dashboard. Is the line above zero (profitable) or below zero (loss-making)?

  • Volatility: Look at the example chart. The line swings wildly from profit to loss and back again. This indicates a volatile business model or one undergoing massive changes.

• How to use this information

  • For Job Seekers: A consistently profitable company offers far greater job security.

  • For Sales Teams: Profitable clients are "safe bets." They are less likely to default on invoices and generally have more discretionary budget to spend on your services. If you see a company consistently below the zero line, ensure you get paid upfront!

Want to test your new skills? Check out our full example dashboards here.