Comprehensive income

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Comprehensive İncome (or earnings) is a specific term used in companies' financial reporting from the company-whole point of view. Because that use excludes the effects of changing ownership interest, an economic measure of comprehensive income is necessary for financial analysis from the shareholders' point of view (All changes in Equity except those resulting from investment by or distribution to owners.)


Comprehensive income is defined by the Financial Accounting Standards Board, or FASB,[1] as “the change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.”


Items included in comprehensive income, but not net income are reported under the accumulated other comprehensive income section of shareholder's equity.

Financial Analysis[edit]

Comprehensive income attempts to measure the sum total of all operating and financial events that have changed the value of an owner's interest in a business. It is measured on a per-share basis to capture the effects of dilution and options. It cancels out the effects of equity transactions for which the owner would be indifferent; dividend payments, share buy-backs and share issues at market value.

It is calculated by reconciling the book value per-share from the start of the period to the end of the period. This is conceptually the same as measuring a child's growth by finding the difference between his height on each birthday. All other line items are calculated, and the equation solved for comprehensive earnings. [2]

      Shareholders' Equity, beg. of period (per share)
    - Dividends paid (per share)
    + Shares issued (premium over book value per share)
    - Share buy-backs (premium over book value per share)
    + Comprehensive Income (per share)
    = Shareholders' Equity, end of period (per share)

See also[edit]


  1. ^ FASB Statement 130: Reporting Comprehensive Income (June 1997)
  2. ^ How to measure comprehensive income.