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401
C
ritical Thinking Questions
Developing your understanding
1. Why is it important for all companies to use the similar categories for their financial statements?
2. Why do we need both the income statement and the balance sheet to understand the financial health
of a business?
3. How does the information on the income statement influence what is presented on the balance sheet?
4. If you are going to invest in a business, which categories on the income statement are the most
important to you? Why?
8.5 Corporate Finance