JN Plc’s Income Statement and Its Negative Features

Subject: Finance
Pages: 2
Words: 322
Reading time:
2 min

Many people often find it difficult to use financial information documented in a company’s income statement unless they understand how to interpret the data on it. Relative to this statement, three negative features may emerge from the interpretation of JN plc’s income statement, and the first one is that the company has been unable to increase its revenue streams over the years.

JN plc: Income statements for two years.
JN plc: Income statements for two years.

This is because the total income for the years 2018 and 2019 has remained relatively constant at 87,500 in 2018 and 87,000 in 2019. The lack of significant change in this metric may be interpreted as stagnation in the firm’s overall business strategy. The second negative feature is that the firm has been unable to collect adequate premiums over the two-year period under analysis because the gross written premium declined during the period under assessment. The reduction in gross written premium may mean that the existing company’s clients have been unable to make steady premium payments or that the operating business environment has made it difficult for them to make regular premiums.

Additionally, the reduction in gross written premiums may imply that the firm is not making enough effort in getting new business and that its marketing department is not as effective as it should be. Thirdly, the increase in the reinsurer’s share may also be interpreted as an increase in the risk profile of the insurance business. An increase in this item in the income statement between 2018 and 2019 may be negatively interpreted as an indicator of increased exposure to liabilities that the company may not be able to meet effectively. This statement may further be interpreted as a weakness in the company’s overall risk profile and ability to settle claims.