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Business Finance EBK HEALTHCARE FINANCE: AN INTRODUCTION

a. To explain : The difference between operating and net income. Introduction: ‘Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period. Net income is a broader term and operating income a part of net income. The difference between the two has been discussed below: Net income: It is money earned from sales or rendering services less the expenses incurred to perform such business operations whereas net loss is the scenario where such expenses exceed the revenue earned from sales or rendering of services in a particular period. Operating income: It refers to the money earned from the primary operations of the business. It is the amount left after operating expenses has been deducted from revenue earned during the period. b. To discuss : The reason for referring net income as bottom line. Introduction: ‘Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period. Net income: It is money earned from sales or rendering services less the expenses incurred to perform such business operations whereas net loss is the scenario where such expenses exceed the revenue earned from sales or rendering of services in a particular period. It is shown at the end of an income statement after deducting all the expenses from the revenues earned during the period. Thus, it is referred to as bottom line. Also, it states the bottom line of a business i.e. its profitability. c. To discuss : The difference between net income and cash flow. Introduction: ‘Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period. Net income is money earned from sales or rendering services less the expenses incurred to perform such business operations whereas net loss is the scenario where such expenses exceed the revenue earned from sales or rendering of services in a particular period. Cash flow: It shows the actual cash flow for the period. It shows the actual inflow and outflow of cash and ignores the non-cash transactions. d. To discuss : The better analysis for financial condition of a company. Introduction: ‘Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period. Net income analysis: Income statement of a company helps to analyze the profitability of a company. Cash flow analysis: Cash flow of a company helps to analyze the position of cash and its equivalent of a company. A company with low net income indicates poor profitability whereas low cash flow indicates low level of cash and its equivalent. Thus, both of them are required to evaluate the financial position of a company.

a. To explain : The difference between operating and net income. Introduction: ‘Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period. Net income is a broader term and operating income a part of net income. The difference between the two has been discussed below: Net income: It is money earned from sales or rendering services less the expenses incurred to perform such business operations whereas net loss is the scenario where such expenses exceed the revenue earned from sales or rendering of services in a particular period. Operating income: It refers to the money earned from the primary operations of the business. It is the amount left after operating expenses has been deducted from revenue earned during the period. b. To discuss : The reason for referring net income as bottom line. Introduction: ‘Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period. Net income: It is money earned from sales or rendering services less the expenses incurred to perform such business operations whereas net loss is the scenario where such expenses exceed the revenue earned from sales or rendering of services in a particular period. It is shown at the end of an income statement after deducting all the expenses from the revenues earned during the period. Thus, it is referred to as bottom line. Also, it states the bottom line of a business i.e. its profitability. c. To discuss : The difference between net income and cash flow. Introduction: ‘Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period. Net income is money earned from sales or rendering services less the expenses incurred to perform such business operations whereas net loss is the scenario where such expenses exceed the revenue earned from sales or rendering of services in a particular period. Cash flow: It shows the actual cash flow for the period. It shows the actual inflow and outflow of cash and ignores the non-cash transactions. d. To discuss : The better analysis for financial condition of a company. Introduction: ‘Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period. Net income analysis: Income statement of a company helps to analyze the profitability of a company. Cash flow analysis: Cash flow of a company helps to analyze the position of cash and its equivalent of a company. A company with low net income indicates poor profitability whereas low cash flow indicates low level of cash and its equivalent. Thus, both of them are required to evaluate the financial position of a company.

Solution Summary: The author explains the difference between operating and net income.

EBK HEALTHCARE FINANCE: AN INTRODUCTION

EBK HEALTHCARE FINANCE: AN INTRODUCTION

6th Edition

ISBN: 9781567937428

Author: Gapenski

Publisher: YUZU

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EBK HEALTHCARE FINANCE: AN INTRODUCTION

Ch. 3 - Prob. 1.1STQ Ch. 3 - Prob. 1.2STQ Ch. 3 - Prob. 2.1STQ Ch. 3 - Prob. 2.2STQ Ch. 3 - Prob. 2.3STQ Ch. 3 - Prob. 3.1STQ Ch. 3 - Prob. 3.2STQ Ch. 3 - Prob. 3.3STQ Ch. 3 - Prob. 3.4STQ Ch. 3 - Prob. 3.5STQ

Ch. 3 - Prob. 4.1STQ Ch. 3 - Prob. 4.2STQ Ch. 3 - Prob. 4.3STQ Ch. 3 - Prob. 5.1STQ Ch. 3 - Prob. 5.2STQ Ch. 3 - Prob. 5.3STQ Ch. 3 - Prob. 6.1STQ Ch. 3 - Prob. 6.2STQ Ch. 3 - Prob. 7.1STQ Ch. 3 - Prob. 7.2STQ Ch. 3 - Prob. 7.3STQ Ch. 3 - Prob. 8.1STQ Ch. 3 - Prob. 8.2STQ Ch. 3 - Prob. 8.3STQ Ch. 3 - Prob. 8.4STQ Ch. 3 - Prob. 9.1STQ Ch. 3 - Prob. 9.2STQ Ch. 3 - Prob. 9.3STQ Ch. 3 - Prob. 10.1STQ Ch. 3 - Prob. 10.2STQ Ch. 3 - Prob. 11.1STQ Ch. 3 - Prob. 11.2STQ Ch. 3 - Prob. 12.1STQ Ch. 3 - Prob. 12.2STQ Ch. 3 - Prob. 12.3STQ Ch. 3 - Prob. 13.1STQ Ch. 3 - Prob. 13.2STQ Ch. 3 - Prob. 13.3STQ Ch. 3 - Prob. 13.4STQ Ch. 3 - Prob. 14.1STQ Ch. 3 - Prob. 14.2STQ Ch. 3 - Prob. 14.3STQ Ch. 3 - Prob. 15.1STQ Ch. 3 - Prob. 15.2STQ Ch. 3 - Prob. 16.1STQ Ch. 3 - Prob. 16.2STQ Ch. 3 - Prob. 3.1Q Ch. 3 - Prob. 3.2Q Ch. 3 - Prob. 3.3Q Ch. 3 - Prob. 3.4Q Ch. 3 - Prob. 3.5Q Ch. 3 - Prob. 3.6Q Ch. 3 - Prob. 3.7Q Ch. 3 - Prob. 3.8Q Ch. 3 - Prob. 3.9Q Ch. 3 - Prob. 3.1P Ch. 3 - Prob. 3.2P Ch. 3 - Prob. 3.3P Ch. 3 - Prob. 3.4P Ch. 3 - Prob. 3.5P Ch. 3 - Prob. 3.6P Ch. 3 - Prob. 3.7P Ch. 3 - Prob. 3.8P Ch. 3 - Prob. 3.9P

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