Question

Is the Income Statement a tool to evaluate the performance of a company over a specific...

Is the Income Statement a tool to evaluate the performance of a company over a specific period of time? Explain its relevance.

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Answer #1
  • The Income Statement records a company's revenues and expenses over a specific period of time. The last item resulting on the income statement is net income. This depicts how profitable a company has been over a period.
  • The main line items in the Income Statement are: Revenue, COGS, SG&A, Operating Income, Pre-Tax Income, Net Income.
  • An income statement is a tool which evaluates insight of a company's performance over a specific period of time. The statement reports revenue earned and expenses incurred over a specific period.
  • An income statement shows overall performance of a company over a particular period of time by comparing revenue with expenses. It evaluates how much money business earned or lost during that period.
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