Comprehensive income reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It encompasses net income, which is reported on the income statement, and other items that bypass the income statement. An example of an item included within other comprehensive income (OCI) is unrealized gains or losses on available-for-sale securities. These fluctuations in value are not immediately recognized in net income but are accumulated within equity until the securities are sold or impaired.
Presenting a full picture of financial performance is crucial for investors and stakeholders. It provides a broader view of a company’s profitability and overall financial health than net income alone. This metric offers insight into the effects of certain market movements and accounting choices that would otherwise be overlooked. Understanding the components of this figure assists users in making more informed decisions about a company’s value and future prospects.
