what is comprehensive income 
comprehensive income is the variation in the value of a company s net assets from non owner sources during a specific period it includes net income and unrealized income unrealized income can be unrealized gains or losses on for example hedge derivative financial instruments and foreign currency transaction gains or losses comprehensive income provides a complete view of a company s income some of which may not be fully captured on the income statement investopedia laura porterunderstanding comprehensive incomecomprehensive income is the sum of a company s net income and other comprehensive income for companies comprehensive income sheds light on changes in equity since it includes net income and unrealized income and losses it provides the big picture of a company s value for investors comprehensive income is useful because the information can help their decision making where the company s feasibility as a potential investment is concerned the purpose of comprehensive income is to show all operating and financial events that affect non owner interests as well as net income comprehensive income includes unrealized gains and losses on available for sale investments it also includes cash flow hedges which can change in value depending on the securities market value and debt securities transferred from available for sale to held to maturity which may also incur unrealized gains or losses gains or losses can also be incurred from foreign currency translation adjustments and in pensions and or post retirement benefit plans income excluded from the income statement is reported under accumulated other comprehensive income of the shareholders equity section income from non owner sources increases the value of a company however since it is not from the ongoing operations of the company s normal line of business it is not appropriate to include it in the traditional income statements comprehensive income excludes owner caused changes in equity such as the sale of stock or purchase of treasury shares statement of comprehensive incomea company s income statement details revenues and expenses including taxes and interest its bottom line is net income however net income only recognizes earned income and incurred expenses a statement of comprehensive income which covers the same period as the income statement reflects net income as well as other comprehensive income the latter being unrealized gains and losses on assets that aren t shown on the income statement the statement of comprehensive income gives company management and investors a fuller more accurate idea of income the net income section provides information derived from the income statement about a company s total revenues and expenses the amount is adjusted to account for non owner activities net income is arrived at by subtracting cost of goods sold general expenses taxes and interest from total revenue the other comprehensive income section provides information on the company s unrealized gains losses revenue and expenses here are some examples of other comprehensive income that you may find on the comprehensive income statement at the end of the statement is the comprehensive income total which is the sum of net income and other comprehensive income in some circumstances companies combine the income statement and statement of comprehensive income or it will be included as footnotes however a company with other comprehensive income will typically file this form separately the statement of comprehensive income is not required if a company does not meet the criteria to classify income as comprehensive income financial statements including those showing comprehensive income only portray activity from a certain period or specific time they can t guarantee future performance comprehensive income examplelike other publicly traded companies ford motor company files quarterly and annual reports with the sec in its first quarter filing for 2023 it published its consolidated statements of comprehensive income which combines comprehensive income from all of its activities and subsidiaries featured below 1pros and cons of the statement of comprehensive incomeit provides a more comprehensive view of a company s income than the income statement alonecompany management can use the added information about income to inform smarter planning for revenue and costs as well as operational decisionsinvestors can gain better insight into a company s profitability and the stability of earnings they can use it as a tool to compare companies as potential investmentsthe inclusion of unrealized gains and or losses can distort the view of a company s financial healththe values for other comprehensive income relate to assumptions not actual resultscomprehensive income doesn t assure future profitability it only presents a picture of a company s profitability for a particular period of time in the past