Using Home Depot, Inc. 2008 Annual Report located in Appendix A of the text, answer the following questions:
What does the income statement tell you about the company? Why is this statement important? What business decisions could be made using the income statement?
What does the balance sheet tell you about the company? Why is the balance sheet important? What business decisions could be made using the balance sheet?
What does the statement of cash flows tell you about the company? What business decisions could be made using the statement of cash flows?
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?
What does the income statement tell you about the company?
How much they sold (Net Sales), what the cost of the items sold were (COGS), the operating costs of the business (total operating expenses), the results of their core retail operations (operating income), the costs of financing and taxes, and the overall results of core retail and other items (net income).
Why is this statement important?
Because it tells me if the transactions during the period were priced high enough to cover costs. In other words, were the activities fruitful (profitable).
What business decisions could be made using the income statement?
Examples of questions that the income statement would help to answer:
Will you have enough profits to cover a new expense?
What is the likely change to profits from additional sales?
Did management do a good job meeting profit goals?
Are most of the profits coming from retail activities?
What is the typical markup on goods sold?
What does the balance sheet tell you about the company?
What is owned, owed, and the difference (equity). You can ...
Your response is 638 words, most of which is generic and could be said of ANY income statement, balance sheet or cash flow statement, not just Home Depot. The discussion includes examples of questions that these statements could answer are given in addition to listing managerial data that is not available from standard GAAP financial statements. Add your thoughts and specifics from Home Depot to form your assignment response at whatever length is needed.