Financial Communication Assignment - Admission/Application Essay Example

As potential investor, I would be more concerned with the statement of comprehensive incomes of a company before deciding to invest in it. The statement of comprehensive incomes, also known as the income statement or the profit and loss report is a financial statement that is mainly concerned with reporting on a company’s income, expenditure and profits or losses (Fridson, & Alvarez, 2011, pp. 17). This information is very important in making an informed investment decision for any potential investor.

There are several reasons why I would opt to analyze this financial statement over the others before deciding on where to invest my funds. Investors are mostly concerned with a company’s profitability and the ability of a company to conduct sustained business activities in to the foreseeable future (Gehner, 2008, pp. 13). As such, investors are more concerned with issues such as a company’s gross profit, sales, expenses, and net profit over a number of financial periods. This information can only be found in a comprehensive income statement.

Other major financial statements such as the statement of financial position only provide information about a company’s assets, capital, and liabilities, while the cash flow statement only focuses on movement of cash in and out of a company (Gehner, 2008, pp. 57). While these other major financial statement are useful, they cannot be relied upon for decision making by investors because they do not reveal any information about profitability of a business. The statement of comprehensive incomes contains various sections with useful information for investors.

Among the various sections of the income statement, include the gross profit section, operating expenses, and the net earnings sections (Gehner, 2008, pp. 78). The gross profit section of the income statement, for instance, helps to paint a perfect picture of a company’s financial performance over a financial period. Investors are more concerned