What is a key indicator of a business's financial health found in the income statement?

A key indicator of a business's financial health found in the income statement is net profit. Net profit, also referred to as net income or net earnings, is the amount of money that remains after all expenses, taxes, and costs have been subtracted from total revenue. This figure is crucial as it reflects the actual profitability of the business and serves as a clear measure of financial performance over a specific period.

Investors and stakeholders closely analyze net profit because it indicates how efficiently a company is managing its operations and whether it can sustain its growth and meet its financial obligations. A positive net profit suggests that a business is generating more revenue than it is spending, which is essential for long-term viability. Conversely, a negative net profit could signal financial distress and might lead to further scrutiny from investors and creditors.

The other options, while they represent important aspects of financial management, do not serve as direct indicators of overall profitability in the same way that net profit does. Total expenditures offer insight into spending but do not directly reflect earnings. The break-even point is useful for understanding when a business covers its costs, while operating income reveals earnings from core business operations but does not factor in all expenses like taxes and interest. Therefore, net profit is the most comprehensive indicator of a