Final answer:
To assess a firm's profitability, net income is the most useful figure for potential investors, as it indicates the company's total earnings after expenses. Earnings per share is also a crucial measure as it shows the profit allocated to each share, and while the number of common shares outstanding and income taxes are relevant, they do not directly measure profitability.
Step-by-step explanation:
When reviewing the financial statements of a hotel corporation, a potential investor interested in the firm's profitability would find net income to be the most useful figure. Net income represents the company's total earnings after subtracting all expenses, including the cost of goods sold, operating expenses, interest, taxes, and any other expenses. This figure gives a clear indication of the company's financial performance over a specific period and is crucial for assessing its profitability.
Another important figure is earnings per share (EPS), which indicates how much money shareholders would receive for each share they own if the company decided to distribute its net income. To calculate EPS, the net income is divided by the number of common shares outstanding. This measure allows investors to compare profitability on a per-share basis, which is handy for comparing companies of different sizes or to assess the value of their investment.
The number of common shares outstanding is also relevant as it can affect the EPS calculation and provides insight into the company's capital structure. However, it does not directly reflect profitability. Income taxes impact the net income and effective tax rate but do not offer a comprehensive view of profitability on their own.