Analysis of Financial Statements

Essay by secondchildUniversity, Bachelor'sA, June 2008

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Analysis of Financial Statements

Yolanda Cannon, Tiffany Nicole Jackson & Karmisha Womack

University of Phoenix

Financial Analysis for Managers I


Robert Fencl

10 May 2007



Analysis of Financial Statements

Financial statements or reports are records of a company's financial transactions. They determine the profitability of a company's finances in the short-term and long-term. There are four basic financial statements, the Balance Sheet, the Income Statement, the Cash Flows Statement, and the Statement of Retained Earnings (Wikipedia, The Free Encyclopedia [WTFE], 2007).

Our textbook, Accounting: Concepts and Applications, gives the following definitions for the four primary financial statements:

The Balance Sheet reports a company's assets, liabilities, and owners' equity at a particular date.

The Income Statement reports the amount of net income earned by a company during a period.

The Statement of Cash Flows reports the amount of cash collected and paid out by a company during a period of time.

The Statement of Retained Earnings reports the change in retained earnings during a period of time.

Our learning team has selected to review the financial statements of two of the leading companies in the retail pharmacy industry, Walgreen Co. and CVS Corporation. Walgreens and CVS are common household names. It is virtually impossible to go into any city and not pass by a Walgreens and/or CVS. These companies have stock that is publicly traded. Both companies must produce public financial statements at the end of every fiscal year for potential investors, shareholders, etc.

Our team goal is to examine the financial statements for both companies and give a description of the financial information included in these statements. But before we go into detail on each company's vital information, we will give some...