If an analyst wants to know how likely it is that a company would be able to earn a profit,which of the following statements would be MOST useful?
A) Income statement
B) Balance sheet
C) Statement of owner's equity
D) Statement of cash flows

Question

Quizplus · Accepted Answer

The income statement shows the revenue and expenses for a specific period, which allows analysts to determine a company's profitability. By comparing the revenue to the expenses, an analyst can calculate the net income or loss for that period and assess the likelihood of the company earning a profit. The balance sheet, statement of owner's equity, and statement of cash flows are important financial statements, but they do not provide the same level of insight into a company's profitability as the income statement.

If an Analyst Wants to Know How Likely It Is