Chapter 3, End of Chapter, Review Questions, Exercise 2
Here is a tip:
Net income is computed as the difference between total revenue and total expenses.
The income statement is a financial statement that provides information about the financial position of a company and its capabilities. It can assist lenders in deciding if they want to invest money in the company.
The lender decides a company's creditworthiness after analyzing the company's future earning capacity.
The ability of a company to fulfill its future obligations can be determined by analyzing its income statement.
Creditors analyze the income statement to decide whether to lend money to a company or not.