Question

ge text: Managerial FOCUS 1. An officer of Westway Corporation recently commented that when he receives the firm's financial statements, he looks at just the bottom line of the income statement-the line that shows the net income or net loss for the period. He said that he does not bother with the rest of the income statement because it's only the bottom line that counts." He also does not read the balance sheet. Do you think this manager is correct in the way he uses the financial statements? Why or why not?

Answer 1

Step-by-step explanation:

While the bottom line of the income statement is certainly important, it is not the only important aspect of the financial statements. The other components of the income statement, such as revenue and expenses, can provide valuable insights into a company's operations and financial health. Additionally, the balance sheet provides important information about a company's assets, liabilities, and equity, which can be crucial for assessing the overall financial position of the company.

Therefore, it is not advisable for a manager to solely rely on the bottom line of the income statement and ignore the other components of the financial statements. It is important for managers to have a comprehensive understanding of a company's financial situation in order to make informed decisions and take appropriate actions.