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Financial Statement Part I

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Financial Statements Paper Part I
ACC 497
Dally Sichmeller
August 9, 2014
Robert Davis

Financial Statements Paper Part Companies issue annual reports every year, these annual reports contain financial statements that include the income statement, balance sheet and statement of cash flow. In order to understand the annual report, one has to know what information these statements give and why they are important. The information in these statements can also be useful in making business decisions. In this paper we will discuss the contents, the importance and the usefulness of these statements found in Home Depot 2008 Annual Report.
Consolidated Statements of Earnings - Income Statement The consolidated statement of earnings or the income statement reports the companies income, expenses, and profits over a period of time, usually a year. The Home Depot uses a multiple-step income statement, this type of statement separates revenue operating revenue and expenses from all other types of revenue and expenses. The income statement includes net sales, costs of goods sold, and gross profits according to the Home Depots income statement sales and profit has decreased over the last three years. Part of this could be due to the increase in operating and non-operating expenses. Cash disbursements and cash receipts are not included in the income statement. Income statements also show the earnings per share (EPS) or how much money a shareholder would receive if the Home Depot were to distribute all of their net income for that period. The income statement can show investors and creditors the past financial performance for Home Depot, it can also predict future performance and asses the capability of generating future cash flow through income and expenses reported ("Wikepedia", 2014). Investors can use the income statement to determine if they should invest in the...

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