3.5 - assessing competitiveness

Question 1

What is a statement of comprehensive income?

Answer 1

The statement of comprehensive income (also called a profit and loss account) shows a firms revenue, costs, and profit.

It indicates if a firm is profitable.

Stakeholders are interested in a firms statement of comprehensive income.

Question 2

What are the different stakeholders who have an interest in a firms statement of comprehensive income?

Answer 2

• Shareholders - shareholders will look at a firms statement of comprehensive income to see how profitable it is
• Managers - managers will be interested in the revenue and expenses of the firm over time to see if they’re changing
• Loan providers - loan providers that have loaned money to a firm might be interested in its operating profit
• Suppliers - suppliers might check if a firms revenue in the past has been enough to pay its suppliers
• Employees - employees might be interested in the profitability of a business, since it may ensure job security if the businesses profits are high