#cfa-level-1 #reading-22-financial-statement-analysis-intro
An analyst examining the income statement might note that Volkswagen was profitable in both years. The company’s profitability declined substantially in 2009, primarily because of lower sales and reduced gross profit. This was not unexpected given the global financial and economic crisis in that year. A better understanding of Volkswagen’s profitability could likely be gained by examining income statements over a longer time period. The analyst might formulate questions related to profitability, such as the following:
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Is the change in revenue related to an increase in units sold, an increase in prices, or some combination?
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If the company has multiple business segments (for example, Volkswagen’s segments include passenger cars, light commercial vehicles, and financial services, among others), how are the segments’ revenue and profits changing?
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How does the company compare with other companies in the industry?
Answering such questions requires the analyst to gather, analyze, and interpret information from a number of sources, including, but not limited to, the income statement.
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Statement of comprehensive incomey shareholders divided by the weighted-average number of ordinary shares of 295 million shares equals basic earnings per share for 2009 of €2.38. Similar detail is provided in the notes for each of the earnings per share numbers.
<span>An analyst examining the income statement might note that Volkswagen was profitable in both years. The company’s profitability declined substantially in 2009, primarily because of lower sales and reduced gross profit. This was not unexpected given the global financial and economic crisis in that year. A better understanding of Volkswagen’s profitability could likely be gained by examining income statements over a longer time period. The analyst might formulate questions related to profitability, such as the following:
Is the change in revenue related to an increase in units sold, an increase in prices, or some combination?
If the company has multiple business segments (for example, Volkswagen’s segments include passenger cars, light commercial vehicles, and financial services, among others), how are the segments’ revenue and profits changing?
How does the company compare with other companies in the industry?
Answering such questions requires the analyst to gather, analyze, and interpret information from a number of sources, including, but not limited to, the income statement.
3.1.2.2. Other Comprehensive Income
Comprehensive income includes all items that impact owners’ equity but are not the result of tra Summary
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