Question

Part I Annual reports include not only comparative financial statements sources of information, such as: aso other A multiyear summary of financial highlights, a summary of key statistics for the pas 10 years. Several pages of Notes that accompany the financial statements Reports by management and by the independent auditors in which they express their respective responsibilities for the financial statements. . ' Instructions Answer each of the following questions and briefly explain where in the statements, notes, or other sections of the annual report you located the information used in your answer. a. How many years are covered in each of the primary comparative financial statements? Were all of these statements audited? Name the auditors. What were the auditors' conclu- sions concerning these statements? Home Depot, Inc., combines its statement of retained earnings with another financial statement. Where are details about changes in the amount of retained earnings found? Over the three years presented, have the company's annual net cash flows been positive or negative from (1) operating activities, (2) investing activities, and (3) financing activities? Has the company's cash balance increased or decreased during each of these three years? b. c.

Answer 1

(a): Home Depot, Inc. in its annual report for the year 2017 provides comparative income statement for a period of 3 years i.e. 2017, 2016 and 2015. Its comparative balance sheet is for a period of 2 years i.e. years 2017 and 2016. Its statement of cash flow is also for a period of 3 years i.e. 2017, 2016 and 2015.

(The above statements can be found in pages 31-35 of the company’s 2017 annual report)

Yes, the above mentioned statements were audited and the audit was done by KPMG LLP. The auditor’s conclusion concerning these statements was that the statements present a fair financial position of The Home Depot Inc. and its subsidiaries. The auditor also opined that the company’s internal controls were so that they had to express an unqualified opinion with regards to its effectiveness.

(The above statements can be found in page 30 of the annual report).

(b): The details about the changes in the amount of retained earnings can be found in page 34 of the company’s 2017 annual report under the ‘consolidated statements of stockholder’s equity’. In this statement the company provides beginning balance of retained earnings, net earnings for the year, amount of cash dividends and ending balance for the year.

(c): (1) Cash flow from operating activities have been positive for all the 3 years.

(2) Cash flow from investing activities has been negative for all the 3 years.

(3) Cash flow from financing activities has been negative for all the 3 years.

The company’s cash balance has increased for all the 3 years.

(The above information can be found in page 35).