Consolidated Statements of Earnings
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1. What does the Consolidated Statements of Earnings--the income statement--tell you about the company?
2. What does the balance sheet tell you about the company?
3. What does the statement of cash flows tell you about the company?
4. What information is provided in the statements that will assist you in making these business decisions? What information is not provided that could assist in managerial decision making?
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Solution Summary
1. What does the Consolidated Statements of Earnings--the income statement--tell you about the company?
2. What does the balance sheet tell you about the company?
3. What does the statement of cash flows tell you about the company?
4. What information is provided in the statements that will assist you in making these business decisions? What information is not provided that could assist in managerial decision making?
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The consolidated statement of earnings for Fiscal year 2008 tells us that the company's revenue and profitability declined as compared to previous years, primarily due to the tough economic situation and recession in the country. Even though the top line decreased, the company was not able to reduce its selling and administrative expenses, which impacted its bottom line profitability. The net earnings of the company was reduced to almost half of previous year's earnings due to tough economic situation.
Overall, the impact of recession clearly showed in the income statement of the company as retail industry is considered the bellwether of the economy. Hence, the income statement clearly shows how retail firms are struggling in this tough economy and they need to keep their costs under control to survive during this period. Otherwise, the bottom line profitability will continue to take a big hit. The current scenario is disturbing for the shareholders of the company as earnings per share has significantly reduced. The losses incurred due to discontinued operations has further affected the profitability of the company.
2. What does the balance sheet ...
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