Web Application Chapter 14 page 582

Management and investors are interested in the health of a company. The health of a business can often be determined based on information available in the company's financial statements. One such financial statement is the income statement. To understand how to complete an income statement, it is necessary to be familiar with the terminology used.

Donna McFadden, a stay-at home mother, invested a small amount of money in McDonalds stock several years ago. Donna has no investment background, but does her best to watch investment trends. Scanning through the McDonalds Corporation homepage, www.mcdonalds.com, she selects Corporate, then Press Releases. Donna selects the on-line article "McDonald's Announces Supplemental 1997 Financial Information." Reading through the article, Donna realizes she does not know how some computations are done. Surfing the Internet, Donna finds help at http://toolkit.netscape.com/text/P06_1578.btq. Read the information on this page and answer the following questions.

1. What is another name for an income statement?

2. An income statement lists income, expenses, and net income or net loss. The net income or loss is equal to what?

3. Give three examples of business expenses.

Return to www.mcdonalds.com/whatsnew/pressrelease/index.html#Financial, and answer the following question.

4. According to the article, net income and net income per common share grew four and six percent, respectively. Using basic knowledge of what is included on an income statement, what assumption can be made about income and expenses? The answer given for question 2 above will be helpful.

Show your work and include a date in your answer.

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