Final answer:
The bottom line on the income statement represents a company's net income, and the statement includes various financial metrics used by management to assess profitability. The balance sheet lists assets, liabilities, and net worth, aiding management in evaluating the company's financial health and strategizing for the future.
Step-by-step explanation:
Income Statement and Balance Sheet Explained
The bottom line on the income statement refers to the company's net income, which is the profit after taxes. The income statement also includes other financial information such as revenue, cost of goods sold (COGS), gross profit, operating expenses, operating income, and pre-tax income. This statement is used by management to assess the company's profitability, make decisions about cost control, and strategize for future operations.
The balance sheet, on the other hand, provides financial information about the company's assets, liabilities, and shareholders' equity at a specific point in time. Assets include cash, inventory, and property, while liabilities comprise debts such as loans and mortgages. The difference between the assets and liabilities is known as the net worth or shareholders' equity. Management uses the balance sheet to evaluate the company's financial health, make decisions about capital structure, and strategize for long-term financial planning.