Which of the following is a measure that summarizes the overall past performance of an investment?

• A. Current ratio
• B. Gross profit margin
• C. Comprehensive income
• D. Working capital

Answer: (C)

Verified step by step guidance

1. Understand the concept of comprehensive income: Comprehensive income is a measure that includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. It summarizes the overall past performance of an investment by incorporating both net income and other comprehensive income items.
2. Differentiate comprehensive income from other financial metrics: Current ratio, gross profit margin, and working capital are specific financial metrics that focus on liquidity, profitability, and operational efficiency, respectively. They do not summarize the overall past performance of an investment.
3. Recognize the components of comprehensive income: Comprehensive income includes net income (from the income statement) and other comprehensive income (OCI), which may include items like unrealized gains or losses on investments, foreign currency translation adjustments, and pension adjustments.
4. Understand the reporting of comprehensive income: Comprehensive income is reported in the financial statements, either as a separate statement or combined with the income statement, to provide a complete picture of an entity's financial performance.
5. Apply this knowledge to the question: Based on the explanation, comprehensive income is the correct answer because it provides a summary of the overall past performance of an investment, unlike the other options which focus on specific aspects of financial performance.