What is an income statement waterfall?

An income statement waterfall is a bar chart that walks from total revenue down to net income, with each step showing how much a cost or tax line removes (or adds). Subtotals — gross profit, operating income, pre-tax income — are anchored to zero so the cascade reconciles exactly to the bottom line.

How much of Toll Brothers (TOL) revenue becomes net income?

For TTM through Q2 2026, Toll Brothers turned $11B of revenue into $1.29B of net income — a net margin of 11.7%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are Toll Brothers (TOL) gross, operating, and net margins?

For TTM through Q2 2026, Toll Brothers reported a gross margin of 24.9%, an operating margin of 14.6%, and a net margin of 11.7%. Each subtotal in the waterfall corresponds to one of these margins.

Why does Toll Brothers (TOL) have such a high (or low) gross margin?

Gross margin (gross profit ÷ revenue) reflects how much of each revenue dollar remains after direct production costs. Capital-light software and platform businesses often show gross margins above 60–80% because their cost of revenue is mainly hosting and support. Hardware, retail, and commodity businesses show lower gross margins because raw materials and manufacturing costs are significant. The waterfall makes this visible at a glance — the size of the "Cost of Revenue" bar relative to Revenue is the gross margin complement.

What is the difference between gross, operating, and net margin?

Gross margin = (Revenue − Cost of Revenue) ÷ Revenue. It measures production efficiency. Operating margin = Operating Income ÷ Revenue. It adds operating expenses (R&D, S&M, G&A) and measures the profitability of core operations. Net margin = Net Income ÷ Revenue. It also includes interest, other income/expense, and taxes, and represents the shareholder take after everything.

Toll Brothers (TOL) Income Statement Waterfall

Revenue

$11B

Gross Margin

+24.9%

Operating Margin

+14.6%

Net Margin

+11.7%

Income statement waterfall for Toll Brothers (TOL) — TTM through Q2 2026

Net income: $1.29B

Margin breakdown for Toll Brothers (TOL) — TTM through Q2 2026

Line item	Amount	Running total
Revenue	$11B	$11B
Cost of Revenue	-$8.3B	$2.75B
Gross Profit	$2.75B	$2.75B
Operating Expenses	-$1.13B	$1.62B
Operating Income	$1.62B	$1.62B
Other Income / Expense	$98.9M	$1.72B
Pre-tax Income	$1.72B	$1.72B
Income Tax	-$429M	$1.29B
Net Income	$1.29B	$1.29B

Revenue$11B
Cost of Revenue-$8.3B
Gross Profit$2.75B
Operating Expenses-$1.13B
Operating Income$1.62B
Other Income / Expense$98.9M
Pre-tax Income$1.72B
Income Tax-$429M
Net Income$1.29B

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