Solved by verified expert :Week 7: Financial Analysis:
The Big Picture – Discussion
Issues in Income Reporting (graded)
we all know that an income statement portrays the year-to-date performance of
a business. However, the bottom-line figure in the income statement, i.e.,
net income, is influenced by what is reported in the statement under the
categories of revenues and expenses. Therefore, readers of the income
statement have to carefully examine the income statement in evaluating the
future profitability of a business.
What is the concept of sustainable income? Can you describe in your own
words, without just reproducing the definition from the textbook? Can you
give an example of what this number may look like by using the income
statement of a real-life company?Week 7: Financial Analysis:
The Big Picture – DiscussionDifferent Tools for Financial Analysis (graded)
are different tools for analyzing the financial statements of a company, such
as, horizontal analysis, vertical analysis, ratios for measuring financial
health and profitability, etc. However, before we begin using these tools, it
is important to know the purpose of each tool.
Why do we need different tools for analyzing the financial statements? Don’t
the numbers in the financial statements speak for themselves?