Which of the following financial statements would be most useful if an analyst wants to know the profitability of a company?
A) income statement
B) balance sheet
C) statement of retained earnings
D) statement of cash flows

Question

Quizplus · Accepted Answer

The income statement shows the revenues, expenses, and net income of a company for a specific period. It provides information about the profitability of a company by showing the amount of revenue that has been generated and the expenses incurred in earning that revenue. It allows analysts to calculate profitability ratios such as gross profit margin, operating profit margin, and net profit margin. Therefore, the income statement is the most useful financial statement for determining a company's profitability.

Which of the Following Financial Statements Would Be Most Useful