Describe sustainable income and the importance of sustainable income in the evaluation of the income statement. Choose at least two (2) items or events that will affect sustainable income of a company.
Sustainable income is said to be the amount of money that a company requires in order to meet its expenses. There are so many expenses that a company can incur during its day to day operations and the most important thing is for the company to make sure that it is able to meet this financial obligations in order for it to remain healthy as far as its business activities is concerned. Some of the expenses include operation costs. If the company is not able to finance the operation costs, it means that the company cannot be able to perform as per the strategic goal. There are a number of things that might affect sustainable income. Inflation is one of these things. Sometimes it is hard to predict the market and the valuation of currency hence might make a company to suffer when it comes to sustainable income. The other thing is the rise in cost of living. It makes consumers level of purchase something that affects the general income of the company.
Propose the manner in which you would disclose these items or events to investors. Justify your response.
Before an investor can invest in the company, it is important for all of them to be aware of the things in the company that they will have to put up. This means that it does not matter how difficult or how sensitive the information might be. The most important thing is to make sure that they know all the information. This means that they should be given all the information and the issue of choice be left to them.
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