Question

A comparative balance sheet and income statement are shown for Cruz, Incorporated. What financial statement would be most useful for assessing the company's profitability over time?

A) Comparative Balance Sheet
B) Income Statement
C) Cash Flow Statement
D) Statement of Retained Earnings

Answer 1

The Income Statement would be the most useful financial statement for assessing a company's profitability over time.

Step-by-step explanation:

The Income Statement would be the most useful financial statement for assessing a company's profitability over time. The Income Statement, also known as the Profit and Loss Statement, shows the company's revenue, expenses, and resulting net income or loss for a specific period of time.

By analyzing the Income Statement, you can track the company's revenue and expenses over multiple periods and identify any trends or patterns in its profitability. This statement provides valuable insights into the company's ability to generate profit and its overall financial performance.