1) What 3 items of important information does the income statement reveal about the financial performance of the company over the last three years?
Ans: The income statement lists the revenues minus expenses or costs of goods sold and operating expenses and will reveal a net income or net loss (Revenues – Expenses = Net Profit or Net Loss). Income statements show how much money a company made and spent over a period of time. Income Statements cover a specified period of time usually annually or quarterly. An Income Statement represents only one limited view of the companies’ net profits or net loss after all revenues are listed while expenses (costs) and taxes are subtracted. The Income…show more content… This is the source of the value of the company to its stockholders and to the stock market analyst (Yahoo Finance, 2013). The Balance Sheet may also indicate a negative Shareholder Equity which means the shareholders are losing money. The Balance Sheet also illustrates the trends in borrowing the company has used in the last year. The long term debts that are listed on the balance sheet compared to assets may indicate a problem if the debts are called in by the loaner for some unforeseen reason. There are multiple methods or ratios for determining the future profitability of a company indicated by the line items on the balance sheet (Mertz.J., 2000).
3) Can you identify the major sources of funding used by the company from the information presented in the company's annual report? If not, how could you get this information? No, the sources of funding are not listed specifically on the Financial Statements in the Annual Reports. There is some research that would need to be done to find the specific sources of the funds. There are however many stock owning entities that may indicate sources of funding if they stock owners are banks or other types of lending institutions that could avail the company of