Income Statement
As in any business, three types of reports—the income statement, the balance sheet, and the cash �ow
—help evaluate an HCO's �nancial status. The income statement is a �nancial statement that provides
information about revenues and expenses over a period of time. Revenues represent both cash
received and payer obligations under accrual accounting. Expenses represent the resourceexpenditures to produce the revenue. The difference between revenues and expenses is a measure of
the pro�t or loss of the period in question. Thus, an income statement provides information about the
organization's operations and pro�tability. This is a key point: The income statement is important
because it shows the pro�tability of a company during a speci�ed time interval. Reporting this
information promotes transparency. Financial transparency is when any individual from outside the
�rm is able to read and follow the �nancial statements of a company. If any of the �nancial statementsare not transparent, then an investor may be unsure about whether a company is really pro�table or if
it is hiding potential risks.
An income statement provides information about the organization's operations and pro�tability. No
business can be transparent without providing an accurate income statement.
