Income Statement vs Balance Sheet?
By amirhere on Thu, 2010-02-18 01:26
On a company's "Income statement," Company X has "Revenues" of 1000, and "Cost of Revenue" of 500. Wouldn't that mean the company is profitable?
I have found public companies in this situation that are shrinking their balance sheets, meaning they are not profitable.
So, are they profitable or not, what should you look at?
Look at stock RAD, for example.
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amirhere;
I'm not sure why the question of Income Statement to Balance Sheet.
The Income Statement is used to determine if a company is profitable, while the Balance Sheet is used to determine the company's equity, or in simplest terms, it's net worth.
I looked at Rite Aid's last annual statement, which is from 02/09 and on the face of it, the company is not profitable. But when you back out the depreciation, and impairment charges, the company has adjusted net income of about $0.20 per share.
Wax