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Tags
#cfa-level-1 #financial-reporting-and-analysis #non-recurring-non-operating-items #understanding-income-statement
Question
Why is net income not the best indicator of future income?

[...]
Answer
Because it includes non-recurring and non operating items

Tags
#cfa-level-1 #financial-reporting-and-analysis #non-recurring-non-operating-items #understanding-income-statement
Question
Why is net income not the best indicator of future income?

[...]
Answer
?

Tags
#cfa-level-1 #financial-reporting-and-analysis #non-recurring-non-operating-items #understanding-income-statement
Question
Why is net income not the best indicator of future income?

[...]
Answer
Because it includes non-recurring and non operating items
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Why is net income is not the best indicator of future income? Because it includes non-recurring and non operating items

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Subject 6. Non-Recurring Items and Non-Operating Items
<head>The goal of analyzing an income statement is to derive an effective indicator to predict future earnings and cash flows. Net income includes the impact of non-recurring items, which are transitory or random in nature. Therefore, net income is not the best indicator of future income. Recurring pre-tax income from continuing operations represents the company's sustainable income and therefore should be the primary focus of analysis. Segregating the resul

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