The financial ratio that applies to the income statement is known as the comprehensive income. The comprehensive income provides a statement outlining the summary of an organization’s net assets over a given period. It assesses to important tenets including the net income and the net loss among other comprehensive incomes. Therefore, it would be vital to appreciate that “comprehensive income consists of all the revenues, gains, expenses, and losses that caused stockholders’ equity to change during the accounting period” (What is comprehensive income?).
The primary role of a comparative income statement is to find out how a company makes its revenue and the associated costs in doing so. It provides information on the cost of the sold goods and other expenses such as taxes (Eaton et al., 2013). As earlier stated, the comprehensive income can either denote a profit or a loss. Depending on what it represents, a large number can either represent a good or a bad sign. From the analysis on the table, the comprehensive income primarily deals with the loss that the company has endured. Overall, the comprehensive income (loss) across the years 2012, 2013, and 2014 has been $371, $2694, and $2223 respectively. Therefore, this demonstrates the comparative income loss that the company has made in the last three years.
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The analysis, therefore, demonstrates that over the three years indicated, the company has been on a period of making losses in the three consecutive years. Therefore, the company must embark on several strategies in a bid to alleviate the issue. It must first assess its revenue against all the expenditure and remove all the unnecessary expenses that might have an impact on the overall amount of money generated. It must also engage in cost-cutting endeavors such as reducing the wage bill and limiting other recurrent expenses to only those which are essential to the existence of the business.
References
Eaton, T. V., Easterday, K. E., & Rhodes, M. R. (2013). The presentation of other comprehensive income. The CPA Journal, 83(3), 32.
What is comprehensive income? https://www.accountingcoach.com/blog/what-is-comprehensive-income
