Question

Who have control over the public company who have 20 percent of shares with 3 share holders and rest 80 percent are owner by public with not morethan 1 percent by each shareholder. Also, explain Who appoint the directors etc.

Please explain operating income and expense . when , where we use them .

Answer 1

Here, the control of the company is in the hands of all the shareholders. There are no majority shareholder as no shareholder holds more than 50% of the company's outstanding shares.

2/3 of the total directors are appointed by the shareholders and remaining directors are appointed as per the directions given in the Articles of the company.

Operating income is the profit earned by the company from its operations before deducting tax expenses. Operating expenses are the expenses incurred to perform he operations. Some of the operating expenses are selling expenses, depreciation etc.

Operating Income is calculated by deducting operating expenses from the gross income.

Operating Income is used to know how much the company is making from its main operations. Operating Income is also used to calculate various ratios and perform trend analysis. We also perform horizontal and vertical analysis.

It can be used to monitor the performance of the business over the years.It can be used to take loan form the lenders. Also, it is statutory requirement to disclose the operating income to various stakeholders.