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Meaning of income statements for your company

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Accountant-Lecturer
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case study
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  1. Introduction
  2. Importance of the income statement
  3. Business decisions influenced by the income statement
  4. Information in the financial statements that influences business decision-making
  5. Meaning of a statement of cash flows for your company
  6. Conclusion

The Company's income statement is an important document for profit determination. It is referred to as the P&L (profit and loss) statement, which shows the company's operating expenses, revenue, gross margin, net income and total expenses. Shareholders will constantly inspect the income statements for the firm where they have a stake to ensure their investment remains a strong and profitable. The income statement of Home Depot, Incorporation displays the profit or loss of the corporation during the specific period of accounting. The consolidated statement of income displays the periods of three years. Over a year with the acquisitions, which were done, in 2008 Home Depot, Inc had a net sale of $ 24.0 billion and 7.7-% decrease from 2007 net sales of $ 26.0 billion (Haka, Bettner, & Carcello, 2008).

Home Depot Inc. 2006 Income Statement shows a straight analysis, with a total of $ 33 million in revenue, which steadily rises each year to a total of $ 37 million in 2008. This statement is significant for potential lenders and investors. Seeing a stable increase in net income and revenue over a three-year period, is an attractive aspect because Home Depot shows that it is not only profitable, but also sustaining stable growth. Based on Home Depot capability to earn money for its shareholders, investing in this corporation chain would probably be a sound business decision, evident through inspecting diluted earnings per share over the past three years, which has declined from $ 2.37 per share to $1.34 per share in 2008 (Haka, Bettner, & Carcello, 2008).

[...] (2009). The demand for the financial statements in an unmonitored environment: An evaluation of the production and use of financial statements by privately held small businesses. The Accounting Review, 1-25. Gitman, L. J., & Zutter, C. J. (2011). Principles of Managerial Finance, 13th Edition. Prentice Hall. Kimmel, P. D., Weygandt, J. J., & Kieso, D. [...]


[...] The figure is the total of over $70 million in repurchases of common stock. The bottom line of Home Depots' cash and cash equivalents at end of the year is over $ 519 million (Haka, Bettner, & Carcello, 2008). This is remarkable numbers to would-be investors. This shows investors the Home Depot's ability of gaining capital growth. Business decisions made using the statement of cash flows. Statement of Cash Flows report quantitative information, which helps various different individuals make business decisions. [...]


[...] Meaning of income statements for your company The Company's income statement is an important document for profit determination. It is referred to as the P&L (profit and loss) statement, which shows the company's operating expenses, revenue, gross margin, net income and total expenses. Shareholders will constantly inspect the income statements for the firm where they have a stake to ensure their investment remains a strong and profitable. The income statement of Home Depot, Incorporation displays the profit or loss of the corporation during the specific period of accounting. [...]


[...] Meaning of a balance sheet for your company A balance sheet is a guide to a corporation stockholder's equity, assets and liabilities. The Home Depots' balance sheet in 2008 and 2009 fiscal year data shows a working capital (current assets less current liabilities), ($14674-$12706)-($13, 362-$11,153) that is a deficit of $ 241 million (Haka, Bettner, & Carcello, 2008). A working capital, which is negative, is a poor stability sign for a corporation; nevertheless, in Home Depots' case the figure is due to current liabilities outweighing current assets because of the purchase of equipment and property. [...]

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