Equity, Cash Flow, and Notes Analysis
Introduction
The success of a business entity depends on its ability to properly create, understand and analyze the financial statements. Financial statement analysis is important for understanding profitability and a firm's financial condition. These documents help a firm in many ways, such as in making better financial decision and creating a clearer picture to attract creditors and investors. In highlighting the financial numbers for Wal-Mart, Team A will address the owner¡¦s equity and the cash flow pieces of the business ending fiscal period January 31, 2004. Supportive explanatory notes will help in providing the analysis needed to understand the firm and to state our position in support of the Wal-Mart philosophy that makes it a thriving company.
Statement of Owner¡¦s Equity
The statement of changes in owner's equity shows the changes that took place in the amount of owner's equity during a period of time. The statement starts with the amount of owner's equity on a given balance sheet date and summarizes the additions and subtractions from that amount during a specific period of time. The statement of owners¡¦ equity reports both changes in owner investments in the business and changes in retained earnings for the business. Another important function of this statement is to link the income statement to the balance sheet.
The statement of owners¡¦ equity is usually the shortest and least complicated of the financial statements. The most common change is the retained earnings account. If the business makes a profit, retained earnings increases unless all the profits are paid in dividends or withdrawals by the owners. The two accounts that normally appear on this ...