The income statement is useful for helping to assess the risk or uncertainty of achieving future cash flows.

Question

Quizplus · Accepted Answer

The income statement provides information on a company's revenues, expenses, and net income over a period of time, which can be used to analyze the company's profitability and potential for future cash flows. By examining trends in revenues and expenses, an investor can evaluate the financial health of the company and assess the likelihood of continued profitability and cash flow generation. Therefore, the income statement can be a useful tool for assessing the risk or uncertainty of achieving future cash flows.

The Income Statement Is Useful for Helping to Assess the Risk