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Financial Statements Paper - Part I

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Financial Statements Paper - Part I
Bridgette Toutant
ACC/497
March 31, 2014
Ken Goranson

Financial Statements Paper - Part I A financial statement offers users, such as management, board of directors, and potential investors, information related to the company’s activities and it gives them the ability to make decisions in relation to the company. A certain amount of urgency should exist when providing this useful information because the financial statements are considered to be a powerful and commonly used tool. The most commonly used of all the financial statements would be the income statement because it can be used to examine the profits and losses of a company. Many users do also find that the balance sheets and cash flow statements just as useful in the decision making process. The following will include the analysis of Home Depot’s annual report by examining the income statement, balance sheet, and cash flow statement and looking at how they can help with business decisions. The Consolidated Statements of Earnings, the income statement, tells the user about the sales and expenses of Home Deport during each fiscal year. Analyzing the income statement for Home Depot, it appears that the company had strong sales numbers of over $71 billion each year. Even though the company was able to keep sales over $71 billion, it is noticeable that the sales and gross profits declined from 2007 to 2009 (The Home Depot, 2009). It also seems that an increase in expenses over the years may have contributed to the drop in sales. Another contribution could have been the decline in residential construction and home improvement markets. The income statement is important because it shows the worth of the company and it also shows users the company’s personal holdings. This information is found to be quite helpful in the decision making process. The income

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