Financial Statements Paper Part I
Debbie Melvin
ACC 497/Professor Michael Morris
December 1, 2014
Financial Statements Paper Part I
Introduction
Three of the most important financial statements are the income statement, the balance sheet, and the statement of cash flows. These statements can all provide some much needed information for the business and its investors and creditors. A business can use the information provided in these statements to make some important business decisions. This paper will provide an analysis of The Home Depot’s consolidated statement of earnings, it balance sheet, and its statement of cash flows.
Consolidated Statements of Earnings
The consolidated statements of earnings, which is better known as the income statement, shows the results of a business for a stated period of time (Accounting Tools, 2014). The first part of the income statement deals with revenues. The expenses are subtracted from the revenues to get the company’s profit or loss. The income statement is used to track revenues and expenses so that a business can determine its operating performance over a specific time period. This statement is very important to a business because banks, investors, potential investors, and vendors can use this information to determine credit limits (Accounting Tools, 2014). The Home Depot’s consolidated statement of earnings presents the company’s earnings for three years (2007, 2008, and 2009). They had a decrease in net sales each year. By 2009, sales had decreased from $79,022 to $71,288. Even though they had a decrease in sales, they still had a gross profit of $23,990. The consolidated statement of earnings also shows the company’s operating expenses. The operating expenses included selling, general and administrative expenses and depreciation and amortization. By 2009, the total operating expenses had increased to $4,359. This statement also shows net earnings, basic...