Financial Statements Paper

Topics: Balance sheet, Generally Accepted Accounting Principles, Income statement Pages: 3 (1040 words) Published: April 29, 2013
The Consolidated Statements of Earnings or the income statement tells financial statement users that there was a decrease in gross profit and net sales for the fiscal year 2008. The Consolidated Statements of Earnings show that the closing of underperforming stores, removal of new store openings from the pipeline, and staff reductions in many Home Depot projects resulted in $951 million in pretax charges. The difference profit and net sales is also a cause of fiscal year 2008 being 52 weeks and fiscal year 2007 53 weeks. That extra week in 2007 accounted for $1.1 billion in net sales that was noted in the financial statements. Even though there was an extra week in 2007, the total operating expenses in 2008 were higher. The income statement is important because it shows the profitability of a company during a certain time interval, normally a 1 year period. The income statement shows financial statement users the expenses, revenues, gains, and losses of a company. Reviewing the income statement can help make many. The income statement can provide investors make decisions about an organizations future economic viability. Home Depot’s income statement can be used to cut expenses out of their budget. Inventory related expenses could be reduced by decreasing storage expenses. The income statement also gives Home Depot information based on customer transactions and the average ticket sale. Teams may be able to take this information and use it to put together a strategy for increasing the average amount per customer transaction. Home Depot’s balance sheet shows that the company has decreased its total current liabilities and total long-term liabilities. However, the balance sheet does show a decrease in total assets, with a significant decrease in construction in progress. The net worth of a company is important to the company and its investors. The balance sheet is important because it provides this information to users of the financial statements....

References: The Home Depot, Inc. Annual Report. Retrieved from Fundamentals of Financial Accoutning.
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