Home Depot Financial Income Statement Essay Example | Topics and Well Written Essays - 1000 words

Home Depot Financial Income Statement - Essay ExampleSince the main purpose of line of products is to generate profits from its operations, the income statement is very of the essence(predicate) since it helps to show if the organization is in a position to achieve its goals. This helps the responsible authorities to make important decisions that can help to improve the operations of the organization in the event that it has been recording losses. Decisions such as scaling down the operations of business if it has been making losses can be made using its income statement. On the other hand, a business can expand its operations if it has been operating profitably everywhere a give n accounting period. For instance, the income statement of Home Depots Annual Report (2008, p. 18) shows that Net Sales for financial 2008 decreased 7.8% to $71.3 million from $77.3 billion for fiscal 2007. On the other, Gross Profit decreased 7.7% to $24.0 billion for fiscal 2008 from $26.0 billion fo r fiscal 2007 while operating expenses increased 4.7% to $17.8 billion for fiscal 2008 from $17.1 billion for fiscal 2007. These statistics point a negative picture in the operations of the caller-out and this is the reason why a decision to close underperforming stores during the set-back quarter of 2008 was made. Instead of making profits, the company has been recording losses in its operations.2. The balance sheet of the company speaks volumes about its stock. The balance sheet of the company is generally comprised of assets, liabilities as well as equity (Investopedia, 2014). The assets show things that are of value to the company and they can be converted into cash at any given over period. On the other hand liabilities show what the company owes to others while equities represent earnings contributed by shareholders. A companys balance sheet shows if the company is able to sustain its operations through creating a fine balance between what belongs to it and what it owes to others. In actual fact, a balance sheet is very important in