Final answer:
Income statements are primarily used to help determine credit limits by providing information on a company’s financial health, which lenders use to establish borrowing capacity.
Step-by-step explanation:
Income statements are used to help determine credit limits. An income statement is a financial document that shows a company’s revenues and expenses over a specific period, usually a fiscal quarter or year. This document is vital for various stakeholders such as investors, creditors, and management to assess the financial health of a company and to make informed financial decisions. Closely related to credit limits, lenders often review a company's income statement to evaluate its ability to repay borrowed funds. By understanding the company’s profitability, lenders can establish appropriate credit limits to minimize risk. Options such as employee pay or prices of goods and/or services are generally not directly determined by an income statement, though it can provide insights into the overall performance that might indirectly influence these aspects.