Describe the nature and purpose of Net Income to Ordinary Shareholders.docx - Describe the nature and purpose of Net Income to Ordinary Shareholders and

Describe the nature and purpose of Net Income to Ordinary Shareholders.docx

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Describe the nature and purpose of Net Income to Ordinary Shareholders, and how it contrasts to Cash Flow from Operations. Net income is a summarised measure of firm’s performance as measured by accrual accounting. It is the bottom-line profit after all income and all expenses have been accounted for. Net Income to Ordinary Shareholders measures the portion of net income that is goes to the common shareholders after all minority interest and preference share is distributed. Net income to Ordinary Shareholders measures the value added to the company relative to the risky capital that has been injected by the common shareholder. Net Income predicts a company’s future cash flow, whereas Cash flow from Operations is simply the realisation of cash in this period. Net income aids in predicting future cash flows by reporting transactions with cash consequences at the time when the transactions occur, rather than when the cash is received or paid. Net
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  • Spring '10
  • Michaelson
  • purpose of Net Income

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