Sustainable Income and Ratio Analysis\" Please respond to the following: Describ
ID: 2801578 • Letter: S
Question
Sustainable Income and Ratio Analysis" Please respond to the following:Describe sustainable income and the importance of sustainable income in the evaluation of the income statement. Choose at least two (2) items or events that will affect sustainable income of a company. Propose the manner in which you would disclose these items or events to investors. Justify your response. Sustainable Income and Ratio Analysis" Please respond to the following:
Describe sustainable income and the importance of sustainable income in the evaluation of the income statement. Choose at least two (2) items or events that will affect sustainable income of a company. Propose the manner in which you would disclose these items or events to investors. Justify your response. Sustainable Income and Ratio Analysis" Please respond to the following:
Describe sustainable income and the importance of sustainable income in the evaluation of the income statement. Choose at least two (2) items or events that will affect sustainable income of a company. Propose the manner in which you would disclose these items or events to investors. Justify your response.
Explanation / Answer
SUSTAINABLE INCOME
Sustainable income is the most likely level of income to be obtained in the future.
It does not include unusual or out of ordinary revenues, expenses, gains and losses.
IMPORTANCE
Sustainable income is important because it helps analysts derive an estimate of future earnings without the noise of unusual items.
The two items or events that will affect sustainable income of a company are discontinued operations and other comprehensive income.
1. Discontinued Operations is the disposal of a significant component of a business, such as the elimination of a major class of customers or an entire activity.
2. Comprehensive Income is the sum of net income and other comprehensive items.
Manner of disclosing these items or events to investors as follows:
I Revenue
II Expenses
III Net Income from continuing operations
IV Net income from discontinuing operations
V Other Comprehensive Income
VI Total Income
VII Earnings per share
VIII Diluted earnings per share
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