Estimate Dividends • Most income statements include a statement of the business's earnings per share. Thus, if an investor in the business reads the income statement, he can determine approximately how much of a return he can expect on his investment for the period the statement covers. he can also estimate his earnings over the next several quarters by examining the earnings from this statement period. The actual dividends he receives may be greater or less, however, because the business's performance can fluctuate based on a wide variety of factors. Point Out Weaknesses • Business owners can find weaknesses in their business's structure or financial dealings by examining the income statement. For example, if a business finds that it takes in adequate revenue but never seems to have enough cash on hand, the business can work on improving cash flow. Since the income statement only provides an overview of the business's activity, business owners should check the statement against other records before making financial decisions to ensure that
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This note was uploaded on 03/27/2012 for the course IS ism789 taught by Professor Hyuio during the Spring '12 term at Stratford.