05-20-2011, 09:20 PM
. What is the purpose of income statement? (3)
An Income Statement, also called a Profit and Loss Statement (P&L), is a financial statement for companies that indicates how Revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into net income (the result after all revenues and expenses have been accounted for, also known as the "bottom line"). The purpose of the income statement is to show managers and investors whether the company made or lost money during the period being reported.
*Is Income statement important in fundamental analysis? (Marks 5)*
Income Statement:
This statement is used more frequently by investors, not only to assess current management performance but also as a guide to the company's future profitability. The income statement represents flows for a particular period, usually one year.
The key item for investors on the income statement is the after-tax net Income, which, divided by the number of common shares outstanding, produces earnings per share.
Earnings from continuing operations typically are used to judge the company's success and are almost always the earnings reported in the financial press. Nonrecurring earnings, such as net extraordinary items that arise from unusual and infrequently occurring transactions, ate separated from income from continuing operations.
An Income Statement, also called a Profit and Loss Statement (P&L), is a financial statement for companies that indicates how Revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into net income (the result after all revenues and expenses have been accounted for, also known as the "bottom line"). The purpose of the income statement is to show managers and investors whether the company made or lost money during the period being reported.
*Is Income statement important in fundamental analysis? (Marks 5)*
Income Statement:
This statement is used more frequently by investors, not only to assess current management performance but also as a guide to the company's future profitability. The income statement represents flows for a particular period, usually one year.
The key item for investors on the income statement is the after-tax net Income, which, divided by the number of common shares outstanding, produces earnings per share.
Earnings from continuing operations typically are used to judge the company's success and are almost always the earnings reported in the financial press. Nonrecurring earnings, such as net extraordinary items that arise from unusual and infrequently occurring transactions, ate separated from income from continuing operations.
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