Understanding Business through Financial Statements 2

Conversely, the income statement reflects the annual profits, expenditures, and net income written in the final fraction of a period. And, the net income is the annual complete disclosure of how the financial manger carried out the earning function of the company for the benefit of the equity owners (Jablonsky & Basrsky, 2001). This is illustrated by a balance sheet below:

“Wal-Mart Balance Sheet (for the Fiscal Years Ended January 31, 1990

and 2000 – Amounts in Millions)” (Jablonsky & Basrsky, 2001)

Assets Current Assets Cash and Equivalents	1990 $13	2000 $1,856
Receivables	$156	$1,341
Inventory	$4,428	$19,793
Other	116	$1,366
Total Current Assets	$4,713	$24,356
Productive Assets Property, Plant, and Equipment	$4,402	$45,348
Accumulated Depreciation	($972)	($9,379)
Net Productive Assets	$3,430	$35,969
Other Assets	$55	$10,024
Total	$8,198	$70,349
Liabilities and Shareholders’ Equity Current Liabilities
Accounts Payable	$1,827	$13,105
Current Debt Due	$24	$2,085
Other	$995	$10,613
Total Current Liabilities	$2,846	$25,803
Long-Term Liabilities
Long-Term Debt	$185	$13,672
Long-Term Lease Obligations	$1,087	$3,002
Deferred Income Taxes and Other	$115	$759
Minority Interest	$0	$1,279
Total Long-Term Liabilities	$1,387	$18,712
Total Liabilities	$4,233	$44,515
Shareholders’ Equity
Common Stock	$237	$1,160
Retained Earnings	$3,728	$25,129
Other Equity Adjustments	$0	($455)
Total Shareholders’ Equity	$3,965	$25,834
Total	$8,198	$70,349
Total Costs and Expenses	$24,278	$158,904
Income before Income Taxes	$1,707	$8,715
Provision for Income Taxes
Current Portion	$609	$3,476
Deferred Portion	$23	($138)
Total Provision	$632	$3,338
Net Income	$1,075	$5,377
Dividends	($124)	($890)
Adjustments to Retained Earnings	$0	($99)
Retained Earnings, Beginning Balance	$2,777	$20,741
Retained Earnings, Ending Balance	$3,728	$25,129

Source: Jablonsky & Basrsky, 2001

In the balance sheet above, the financial figures were chosen from a past record, 1990, and the current record, 2000, simply showing the financial progress made by the company in a record difference of ten years.