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Category: Business and Industry
Date Submitted: 03/25/2014 06:12 PM
Financial Statements Paper Part 1
ACC/497
Financial Statements
It is important for businesses to have the ability to analyze their profits and losses in order to make important business decisions regarding investments and changes in their strategic management plan. Many organizations do this through the use of their financial statements. When examining the financial status of an organization many questions can be answered by examining the information that is reported in the financial statements including non-financial information that is included in the notes to those financial statements. Throughout this paper we will examine the 2008 Annual Report of Home Depot to determine what it tells us about the company, why it is important, and what decisions can be made by using the information that it contains.
First we will examine the Consolidated Statements of Earnings or the Income statement. The income statement is an important part of the financial statements because it shows how profitable an organization during the reporting period. The Consolidated Statements of Earnings contains the income and financial position for Home Depot and all of their subsidiaries for the fiscal year ends 2007, 2008, and 2009. This statement shows a significant drop in net sales in 2009, down nearly 8% from 2008 and 10% from 2007. The drop in sales and earnings could most likely be the result of a crippled economy. It also shows that the net earnings in 2009 are down 49% from 2008 and 61% from 2007. (The Home Depot, 2009) Decisions were made to continue improving the retail business by investing in associates and stores, upgrading their supply chain, and refining customer service. It was also decided to focus on the core business and optimize their capital allocation.
Next we will examine the balance sheet. it is called the balance sheet for the simple reason that each side must balance out. The assets of an organization must be balanced to equal to the...