1、外文文献翻译原文READINGANDFINANCIALSTATEMENTSAREINTENDEDTOGIVEASNAPSHOTOFHOWSUCCESSFULLYTHISCREATIONOFVALUEISBEINGACCOMPLISHEDBUTUNLESSYOUREAPROFESSIONALACCOUNTANT,YOUMAYFINDTHATALOOKATANANNUALREPORTISLIKEAVISITTOANALIENPLANETYOULLENCOUNTERODDTERMINOLOGY,STRANGECALCULATIONS,ANDOFCOURSEBIGNUMBERSTHISGUIDESHO
2、ULDHELPMAKETHINGSMOREACCESSIBLEITEXPLAINSTHETHREEIMPORTANTFINANCIALSTATEMENTSFROMTHEANNUALREPORTOFACOMPANYINCOMESTATEMENTHOWGOODTHECOMPANYISATMAKINGMONEY,ITMEASURESPERFORMANCEOFORGANIZATIONDURINGTHEPERIOD,ITISALSOCALLEDTHESTATEMENTOFOPERATIONSORTHEPROFITANDLOSSSTATEMENTCASHFLOWSTATEMENTHOWTHEYREPAYI
3、NGFORTHEIROPERATIONSANDTHEIRFUTUREGROWTH,ITEXPLAINSHOWCASHWASGENERATEDANDUSEDDURINGTHEPERIODBALANCESHEETWHATTHECOMPANYOWNSANDOWES,ITSHOWSASSETSLIABILITIESOFTHEORGANIZATIONONTHEGIVENDAY,WHICHISALSOREFERREDTOASTHESTATEMENTOFFINANCIALCONDITIONORSTATEMENTOFFINANCIALPOSITIONTHESESTATEMENTSAREPREPAREDANDP
4、RESENTEDUSINGTECHNICALTERMSANDRULESTHATAREBECOMINGINCREASINGLYCOMPLEXINTERPRETATIONOFTHESESTATEMENTSMAYBEAFORMIDABLECHALLENGETOMANYMANAGERSANDOWNERSBUSINESSENTERPRISEPRESENTSTHEIRDATAINAREASONABLYCONSISTENTFORMAT,ALTHOUGHFROMTIMETOTIMEYOUWILLENCOUNTERSOMEEXCEPTIONSFINANCIALSTATEMENTSFORPUBLICLYTRADE
5、DCOMPANIESAREPRESENTEDINACCORDANCEWITHGENERALLYACCEPTEDACCOUNTINGPRINCIPLESGAAP,WHICHISACOLLECTIONOFGUIDELINESTHATPRACTITIONERSSAYRESULTSINAFAIRPRESENTATIONOFAORGANIZATIONSFINANCIALSITUATIONANDRESULTSUSUALLY,COMPANYSTATEMENTSAREPREPAREDINTERNALLYBUTTHENAREEXAMINEDBYPUBLICACCOUNTANTSORAUDITORSACCOUNT
6、ANTSARGUETHATUSINGGAAPISNOTLIKEAPPLYINGTHERULESOFSCIENCEBUTISMORELIKEANARTFORMTHISMEANSTHATTHEAPPLICATIONOFGAAPCANVARYFROMCASETOCASE,ANDTHEALERTREADERSHOULDKEEPTHISCAUTIONINMIND,ALWAYSQUESTIONINGTHEASSUMPTIONSBEHINDACOMPANYSNUMBERSTHREEKEYCONSIDERATIONSAREATTHEHEARTOFGAAPMATERIALITYACCOUNTANTSARGUET
7、HATWHATMIGHTBEMATERIALINONECASEMIGHTNOTBEMATERIALINANOTHERACCOUNTANTSCONSIDERTHEAMOUNTANDNATUREOFTHEITEMWHENDECIDINGIFSOMETHINGISMATERIALACCOUNTANTSFEELTHATBECAUSETHISISOBVIOUSLYASUBJECTIVEMATTER,THEYMUSTRELYONTHEIRJUDGMENTANDEXPERIENCEINDUSTRYPRACTICEBECAUSEFINANCIALPRACTICESVARYFROMINDUSTRYTOINDUS
8、TRY,ITHASBEENIMPOSSIBLETODEVELOPONESETOFACCOUNTINGSTANDARDSANDPROCEDURESFORALLINDUSTRIESFOREXAMPLE,ACCOUNTINGFORFINANCIALINSTITUTIONSISFARDIFFERENTFROMACCOUNTINGFORRETAILERS,ANDVERYDIFFERENTFROMNONPROFITACCOUNTINGTHEREFORE,MOSTINDUSTRIESHAVEMODIFIEDGAAPFORTHEIRPURPOSESCONSERVATISMBECAUSEACCOUNTINGFR
9、EQUENTLYINVOLVESUNCERTAINTY,ACCOUNTANTSFAVORCONSERVATISMPRUDENCE,UNDERSTATINGASSETSANDINCOME,ANDOVERSTATINGLIABILITIESANDEXPENSESCONSERVATISMISALSOEVIDENTINTHEPRINCIPLEOFHISTORICALCOSTS,WHEREBYACCOUNTANTSGREATLYPREFERTOLISTITEMSATORIGINALCOSTINFINANCIALSTATEMENTSTOSUPPORTABOVEDISCUSSION,WESHOULDUNDE
10、RSTANDSTHATACCOUNTINGISAPROCESSTHATREFINEFINANCIALTRANSACTIONSTAKINGPLACEDURINGTHEYEARANDEVENTSOCCURRINGTHEPROCESSISBASEDONCOMBINATIONOFPRINCIPLESOFSCIENCEANDARTTHESEPRINCIPLESAREDUETOACCOUNTINGASSUMPTIONS,CONVENTIONSANDACCOUNTINGCONCEPTSTHEPROCESSISINITIATEDBYJOURNALENTRIES,FOLLOWEDBYLEDGERPOSTING,
11、TRIALBALANCEANDEXTRACTINGFINANCIALSTATEMENTSTHISISTOMEASUREOPERATIONALEFFICIENCYOFTHEORGANIZATIONINCOMESTATEMENT,TOSHOWASSETSLIABILITYSTATUSBALANCESHEETANDEXPRESSABILITYTOGENERATEUSECASHCASHFLOWSTATEMENTTHEINCOMESTATEMENTONLYRECORDSREVENUEEXPENSESRECEIPTS,ANDATTHEENDOFTHEPERIOD,THEBALANCEISTRANSFERR
12、EDTOBALANCESHEETTHUS,INCOMESTATEMENTISAFFECTEDONLYBYATRANSACTIONHAVINGREVENUENATUREWHILEBALANCESHEETISAFFECTEDBYREVENUEASWELLASCAPITALTRANSACTIONHEREITISPERTINENTTOUNDERSTANDTHEDIFFERENCEBETWEEN,REVENUECAPITALTRANSACTIONREVENUETRANSACTIONISORDINARYACTIVITYOFTHEBUSINESS,ANDITGENERATESPROFITORLOSSDUET
13、OTRANSACTIONSWITHTHETHIRDPARTIESCAPITALTRANSACTIONSARERELATEDTOOWNERSFIXEDASSETSTHEBALANCESHEETTHISISASNAPSHOTOFTHECOMPANYONONEGIVENDAY,THELASTDAYOFTHEREPORTINGPERIODTHUS,THEBALANCESHEETWILLSHOWTHEDATEITWASCOMPILED,SUCHASMARCH31,2007THERIGHTSIDEOFTHEBALANCESHEETLISTSTHEASSETS,ORWHATTHECOMPANYOWNSONT
14、HELEFTSIDEARETHELIABILITIES,ORWHATTHECOMPANYOWES,ANDTHESHAREHOLDERSEQUITY,ORTHEFUNDSCONTRIBUTEDBYTHESTOCKHOLDERSTHETWOSIDESMUSTBALANCE,SOTHEBALANCESHEETCANBESUMMARIZED,ASASSETSEQUALLIABILITIESPLUSSHAREHOLDERSEQUITYALETHEBALANCESHEETORSTATEMENTOFFINANCIALPOSITION/CONDITIONISSONAMEDBECAUSEITREPRESENTS
15、THEFOLLOWINGEQUATIONEQUITYLIABILITIESASSETSATANYPOINTINTIMETHISBASICEQUATIONHOLDS,ALTHOUGHTHEAMOUNTSASSIGNEDTOTHEINDIVIDUALELEMENTSWILLFLUCTUATEASSETSINCREASEORDECREASEASRESOURCESAREOBTAINED,DISPOSEDOF,BECOMELESSVALUABLE,ORBECOMEUSEDUPEXPENSEDINTHECOURSEOFOPERATIONSINLIMITEDCIRCUMSTANCES,INCREASESIN
16、VALUEAREALSOREFLECTEDINTHERECORDEDAMOUNTSOFASSETSLIABILITIESINCREASEORDECREASEASOBLIGATIONSAREINCURREDORLIQUIDATEDINSOMECASES,THEAMOUNTSOFLIABILITIESMAYNEEDTOBEESTIMATEDANDARESUBJECTTOADJUSTMENTUPWARDORDOWNWARDINLATEPERIODSINLIMITEDCIRCUMSTANCES,RECORDEDLIABILITIESARECONTINGENTUPONTHEOCCURRENCEOFFUT
17、UREEVENTS,ANDMAYNOTCOMETOPASSATALLEQUITYINCREASESORDECREASESPRIMARILYASARESULTOFINCOMEORLOSSFROMOPERATIONSOFTHEBUSINESSITALSOINCREASESWHENTHEOWNERSCONTRIBUTECAPITALTOTHEBUSINESS,ANDDECREASESWHENTHECAPITALISWITHDRAWNORDIVIDENDSAREPAIDBECAUSETHEFISCALYEARENDBALANCESHEETSHOWSDATAFORTHETWOMOSTRECENTYEAR
18、S,ITISPOSSIBLETOCALCULATECHANGESINTHEACCOUNTSOFTHECURRENTYEARFROMTHEPREVIOUSYEARBALANCESHEETINFORMATIONISORGANIZEDWITHTHELEASTLIQUIDITEMSATTHETOPANDMOVESDOWNTOITEMSOFHIGHESTLIQUIDITYASSETSKEYCOMPONENTSOFTHEASSETSIDEOFTHEBALANCESHEETARECASHANDCASHEQUIVALENTSCASHANDCASHEQUIVALENTSREPRESENTPHYSICALCASH
19、,BANKACCOUNTBALANCES,ANDVERYSHORTTERMINVESTMENTS,WHICHMIGHTBEGOVERNMENTSECURITIESORCOMMERCIALPAPERMARKETABLESECURITIESINVESTMENTOFTEMPORARYCASHBALANCESINSHORTTERMMONEYMARKETSECURITIESWITHMINIMALRISKANDMATURITYOFLESSTHANONEYEARTYPICALMARKETABLESECURITIESARETREASURYBILLS,COMMERCIALPAPER,ANDCERTIFICATE
20、SOFDEPOSITACCOUNTSRECEIVABLEORRECEIVABLESAMOUNTSOWEDTOTHECOMPANYFORGOODSANDSERVICESSOLDBYTHECOMPANYTHERECEIVABLESCATEGORYTYPICALLYINCLUDESANALLOWANCEFORDOUBTFULACCOUNTSTHATTHECOMPANYEXPECTSWILLNOTBEPAIDTHESEAMOUNTSAREBASEDONTHECOMPANYSPASTEXPERIENCEANDINDUSTRYAVERAGESNOTESRECEIVABLEOBLIGATIONSOWEDTH
21、ECOMPANYBYANOTHERENTITYINVENTORIESGOODSAVAILABLEFORSALEORMATERIALSFORPRODUCINGGOODSINVENTORYCANBEINONEOFTHREECATEGORIESRAWMATERIALS,WORKINPROCESS,ORFINISHEDGOODSINVENTORIESMAYBEVALUEDBYDIFFERENTMETHODSTHETWOMOSTCOMMONAREFIRSTIN,FIRSTOUTFIFO,ANDLASTIN,FIRSTOUTLIFOUNDERFIFO,THECOMPANYASSUMESTHATTHEINV
22、ENTORYISSOLDINTHECHRONOLOGICALORDERINWHICHITWASPURCHASEDUNDERLIFO,THECOMPANYASSUMESTHATTHELASTMERCHANDISEAVAILABLEISTHEFIRSTSOLDLIFOANDFIFOAREONLYACCOUNTINGPROCEDURESANDARETOTALLYINDEPENDENTOFTHEWAYPHYSICALINVENTORYISREALLYUSEDWITHNOINFLATION,LIFOANDFIFOWILLPRODUCEESSENTIALLYTHESAMECOSTFORINVENTORYH
23、OWEVER,UNDERHIGHINFLATION,LIFOVALUATIONPUTSACOSTONINVENTORYCLOSERTOTODAYSREPLACEMENTCOSTTHEIMPACTOFTHEINVENTORYVALUATIONMETHODCHOSENEXTENDSBEYONDTHEBALANCESHEETTOTHEINCOMESTATEMENTBECAUSETHECOSTOFRAWMATERIALSINVENTORYISINCLUDEDIN“COSTOFGOODSSOLD“ONTHEINCOMESTATEMENTWITHHIGHINFLATION,LIFOWILLPRODUCEH
24、IGHERCOSTOFGOODSSOLD,ANDTHEREFORELOWERTAXABLEINCOME,WHILETHEBALANCESHEETENTRY“INVENTORIES“WILLBELOWERTHEMETHODOFINVENTORYVALUATIONANDDEPRECIATIONTHATCANBEUSEDFORACCOUNTINGPURPOSEANDTAXATIONPURPOSEISSOMETIMEINCONTRASTOTHERCURRENTASSETSTHESEAREITEMSTHEBUSINESSWILLDERIVESOMEBENEFITFROMWITHINTHENEXTYEAR
25、,ANDINCLUDEITEMSSUCHASPREPAIDINSURANCE,PREPAIDINCOMETAX,ANDPREPAIDINTERESTPROPERTY,PLANTANDEQUIPMENTPROPERTYANDEQUIPMENT,OFTENCALLEDFIXEDASSETS,INCLUDELAND,BUILDINGS,EQUIPMENT,ANDLEASEHOLDIMPROVEMENTSTHESEASSETSARERECORDEDATHISTORICALCOST,ANDTHEN“DEPRECIATED“OVERTHETIMEPERIODTHEYBENEFITTHEFIRMEXCEPT
26、FORLANDWHICHISNOTDEPRECIATEDBECAUSEITISASSUMEDTOHAVEANINFINITELIFEDEPRECIATIONMEANSTHATASSETSSUCHASPLANTANDEQUIPMENTAREAMORTIZED,ORWRITTENOFF,SOASTOALLOCATETHECOSTOVERTHEIRDEPRECIABLELIFEESSENTIALLY,THISISHOWACCOUNTANTSDEALWITHTHEFACTTHATTHESEASSETSWEAROUTTHROUGHUSEDEPRECIATIONEXPENSE,WHICHSHOWSUPON
27、THEINCOMESTATEMENT,REDUCESTAXABLEINCOMEBUTDOESNOTREDUCECASHFLOWINTHEFIRMINTANGIBLESCOSTSINCURREDORRECORDEDPREVIOUSLYWHICHCOULDPROVIDEAFUTUREBENEFITTOTHECOMPANYINTANGIBLESINCLUDEGOODWILL,PATENTSANDCOPYRIGHTSETCGOODWILLISONEOFTHEMOREDIFFICULTCONCEPTSFORBUSINESSREPORTERSTOGRASPITISNOT,ASMANYREPORTERSTH
28、INK,THEGOODFEELINGSPEOPLEHOLDFORACOMPANYINSTEAD,ITCOMESABOUTWHENTHECOMPANYPURCHASESANOTHERCOMPANYFORMORETHANITSBOOKVALUEBOOKVALUEISASSETSMINUSLIABILITIESTHEEXCESSACQUISITIONCOSTISPLACEDONTHEBOOKSAS“GOODWILL“THATMEANSTHATIFACOMPANYPAYSRS2MILLIONFORANOTHERCOMPANY,ANDTHEPURCHASEDCOMPANYSBOOKVALUEISRS1M
29、ILLION,THEGOODWILLISRS1MILLIONLIABILITIESKEYCOMPONENTSOFTHELIABILITY/OWNERSEQUITYSIDEINCLUDEACCOUNTSPAYABLEANDACCRUEDEXPENSESACCOUNTSPAYABLESARECLAIMSTHATOTHERSHAVEONTHECOMPANYFORPAYMENTFORGOODSORSERVICESRENDEREDPAYABLESWOULDINCLUDECREDITPURCHASESOFRAWMATERIALS,SUPPLIES,SERVICES,ETCACCRUEDEXPENSESOR
30、ACCRUEDLIABILITIESAREAMOUNTSOWEDFORGOODSORSERVICES,WHOSEBENEFITSHAVEBEENRECEIVEDBUTARETOBEPAIDINTHEFUTURETYPICALACCRUEDEXPENSESAREPAYROLL,PAYROLLTAXES,PROPERTYTAXES,RENT,ROYALTIES,INTEREST,COMMISSIONS,ETCACOMPANYMIGHTORMIGHTNOTSEPARATEACCRUEDLIABILITIESFROMACCOUNTSPAYABLEBUTTHECATEGORIESAREQUITEDIFF
31、ERENTAMOUNTSACCRUEDAREUSUALLYESTIMATESWHILEPAYABLESAREDEFINITEAMOUNTSACCRUEDLIABILITIESAREUSUALLYLIABILITIESFORWHICHNOBILLSHAVEBEENYETRECEIVEDPAYABLESAREBILLSLOANSANDNOTESPAYABLEAMOUNTSDUEWITHINAYEARONLOANSORNOTESCURRENTMATURITIESOFLONGTERMDEBTTHEAMOUNTOFTHELONGTERMDEBTTHATISDUEWITHINAYEARINCOMETAXE
32、SPAYABLEINCOMETAXESTOBEPAIDWITHINAYEARLONGTERMDEBTDEBTTHATMUSTBEPAIDINSOMEPERIODMORETHAN12MONTHSINTOTHEFUTUREDEFERREDINCOMETAXESTHISREPRESENTSRECONCILIATIONBETWEENTHECOMPANYSTAXACCOUNTINGANDFINANCIALREPORTINGMOSTCOMPANIESUSEONESETOFRULESFORCALCULATINGINCOMEANDINCOMETAXLIABILITY,ANDANOTHERSETFORPREPA
33、RINGFINANCIALSTATEMENTSSUCHASTHEANNUALREPORTTYPICALLY,COMPANIESUSESTRAIGHTLINEDEPRECIATIONFORFINANCIALREPORTINGANDACCELERATEDDEPRECIATIONMETHODSFORTAXPURPOSESBECAUSEITLOWERSTHECURRENTYEARSTAXLIABILITYHOWEVER,THESETAXESARENOTELIMINATED,JUSTDEFERREDTOFUTUREYEARSTHISACCOUNTCAPTURESTHEDIFFERENCEBETWEENT
34、AXESPAIDUNDERTHEACCELERATEDDEPRECIATIONMETHOD,ANDWHATWOULDBEOWEDIFSTRAIGHTLINEDEPRECIATIONHADBEENUSEDEQUITYKEYCOMPONENTSOFTHESTOCKHOLDERSORSHAREHOLDERSEQUITYCOMPONENTINCLUDECOMMONSTOCKTHISISTHEVALUEOFTHECOMMONSTOCKTHATHASBEENSOLDTOTHEPUBLIC,RECORDEDAT“PAR“ORASTATEDVALUEATTHETIMETHESTOCKWASISSUEDPARV
35、ALUEISANARBITRARYFIGUREASSIGNEDBYTHECOMPANYTHISENTRYALSOSHOWSHOWMANYSHARESTHECOMPANYSCHARTERAUTHORIZES,TOBESOLDANDHOWMANYSHARESHAVEACTUALLYBEENISSUEDPREFERREDSTOCKSOMECOMPANIESSELLPREFERREDSHARES,WHICHDIFFERSIGNIFICANTLYFROMCOMMONSTOCKPREFERREDSHAREHOLDERSAREENTITLEDTORECEIVEAFIXEDDIVIDENDBEFORECOMM
36、ONHOLDERS,ANDHAVEAPRIORITYINCASETHECOMPANYISLIQUIDATEDPREFERREDSTOCKOFTENISNONVOTINGCOMMONANDPREFERREDSTOCKAREOFTENCALLEDCAPITALSTOCKCAPITALSURPLUS,ADDITIONALPAIDINCAPITALORCAPITALINEXCESSOFPARVALUEOFSTOCKTHISISTHEADDITIONALAMOUNTPAIDBYTHEORIGINALPURCHASEROFTHECOMPANYSSTOCKINEXCESSOFPARVALUEOFSTOCKF
37、OREXAMPLE,IFACOMPANYOFFEREDANEWSTOCKISSUETOTHEPUBLICATRS10ASHARE,ANDITHADAPARVALUEOFRS1ASHARE,THECAPITALSURPLUSRECORDEDFROMTHATSALEWOULDBERS9PERSHARERETAINEDEARNINGSORREINVESTEDEARNINGSTHISISTHENETINCOMEREINVESTEDBACKINTHECOMPANYSINCEITWASCHARTEREDATTHEENDOFEACHACCOUNTINGPERIODEG,QUARTERLYORANNUALLY
38、NETINCOMEORLOSSFROMTHEINCOMESTATEMENTISTRANSFERREDTOTHERETAINEDEARNINGACCOUNTITEITHERREMAINSINTHEACCOUNTAS“RETAINEDEARNINGS“ORISPAIDOUTASDIVIDENDSTOTHESHAREHOLDERNOTETHATARETAINEDEARNINGSDOESNOTREPRESENTACASHBALANCECASHISSHOWNONTHEASSETSECTIONOFTHEBALANCESHEETFOREIGNCURRENCYTRANSLATIONADJUSTMENTASSE
39、TSANDLIABILITIESOFFOREIGNSUBSIDIARIESARETRANSLATEDATTHEENDOFEACHACCOUNTINGPERIODATCURRENTEXCHANGERATESTHERESULTSOFTHISFLUCTUATINGADJUSTMENTAREACCUMULATEDTHROUGHTIMEINTHISACCOUNTUNREALIZEDGAINONSECURITIESAVAILABLEFORSALETHISREPRESENTSPRICEAPPRECIATIONONFINANCIALASSETSHELDBYTHECOMPANYBUTNOTSOLDDURINGT
40、HEPERIODTHEINCOMESTATEMENTCOMPAREDWITHTHEBALANCESHEET,WHICHISASNAPSHOTOFTHECOMPANYATAPOINTINTIME,THEINCOMESTATEMENTREPRESENTSAFLOWOFFUNDSTHROUGHTHECOMPANYDURINGTHEREPORTINGPERIOD,INDICATEDASAPRIL1MARCH31,2007,ORFOR“FISCALYEAR200607“THISREPORT,ALSOREFERREDTOASANEARNINGSSTATEMENTORSTATEMENTOFPROFITAND
41、LOSS,ANSWERSTHEQUESTION,HOWMUCHDIDTHECOMPANYMAKEFORTHEPERIODTHEINCOMESTATEMENTORSTATEMENTOFOPERATIONSISATABULATIONOFREVENUEANDEXPENSES,THELATTERUSUALLYBROKENDOWNORSUMMARIZEDBYMAJORCATEGORIESOPERATINGINCOMEISANIMPORTANTMEASUREOFTHEENTITYSPERFORMANCE,SINCEITREPRESENTSTHEPRETAXINCOMEEARNEDORLOSSINCURRE
42、DFROMTHECOREOPERATIONSOFTHEBUSINESS,BEFORECONSIDERINGCERTAINFINANCIALCOSTS,OTHERNONOPERATINGITEMS,ANDEXTRAORDINARYGAINSORLOSSESOTHERINCOMEANDEXPENSEINCLUDESFINANCIALCOSTSANDOTHERITEMS,THEOCCURRENCEOFWHICHARETANGENTIALTOTHEPRIMARYPURPOSESOFMEBUSINESS,SUCHASLOSSESONABANDONEDORSOLDASSETSKEYCATEGORIESON
43、THEINCOMESTATEMENTAREREVENUES,GROSSREVENUES,NETOPERATINGREVENUESORSALESTHISISTHETOTALAMOUNTOFSALESRECORDEDBYTHECOMPANYDURINGTHEACCOUNTINGPERIODCOSTOFGOODSSOLDTHISISTHELARGESTEXPENSEONTHEINCOMESTATEMENTTHISCATEGORYTYPICALLYINCLUDESTHECOSTOFINVENTORY,LABOR,ANDDIRECTOVERHEADUSEDTOPRODUCETHEFINISHEDPROD
44、UCTTHECOSTOFGOODSSOLDISDIRECTLYRELATEDTOTHECOMPANYSINVENTORYVALUATIONMETHOD,WHICH,ASNOTEDEARLIER,CANRESULTINHIGHERORLOWERINVENTORYVALUE,ANDLOWERORHIGHERINCOME,DEPENDINGONTHEMETHODEMPLOYEDGROSSPROFITWHENCOSTOFGOODSSOLDISDEDUCTEDFROMREVENUESTHERESULTIS“GROSSPROFIT“OPERATINGEXPENSESCOMPANYSTATEMENTSVAR
45、YGREATLYATTHISPOINTOPERATINGEXPENSESMIGHTBECAREFULLYBROKENOUTORMIGHTGENERALLYBECOVEREDINACATEGORYSOMECOMPANIESCALL“SELLING,GENERALANDADMINISTRATIVEEXPENSES“OPERATINGEXPENSESCANINCLUDERENTONLANDANDBUILDINGS,SALARIESANDWAGESPAID,PAYROLLTAXES,PROPERTYTAXES,TELEPHONE,INSURANCE,RESEARCHANDDEVELOPMENT,DEP
46、RECIATIONANDAMORTIZATION,ANDBADDEBTSOPERATINGINCOME,OPERATINGPROFITORINCOMEFROMOPERATIONSTHISISWHATSLEFTAFTERTHEOPERATINGEXPENSESAREDEDUCTEDFROMTHEGROSSPROFITOTHERINCOMEANDEXPENSESRELATEDTOCONTINUINGOPERATIONSCOMPANIESMAKEANDLOSEMONEYTHROUGHACTIVITIESTHATARENOTPARTOFTHECOREBUSINESSITSELFTHESEITEMSIN
47、CLUDEINTERESTINCOME,INTERESTEXPENSE,GAINORLOSSONSALESOFSECURITIESANDOTHERASSETS,ETCINCOMEBEFOREINCOMETAXESANDCHANGESINACCOUNTINGPRINCIPLESTHISISWHATSLEFTAFTERTHEOTHEREXPENSESAREDEDUCTEDFROMOPERATINGINCOMEINCOMETAXESANDCHANGESINACCOUNTINGPRINCIPLESINCOMETAXESREFLECTTHEAMOUNTOFINCOMETAXTHECOMPANYPAIDI
48、NTHATYEARCHANGESINACCOUNTINGPRINCIPLESOFTENFORCEACCOUNTINGCHANGESTHATHAVEPOSITIVEORNEGATIVEEFFECTSONTHEINCOMESTATEMENTTHOSEEFFECTSALSOARERECORDEDHERENETINCOMETHISISWHATSLEFTAFTEREXPENSESHAVEBEENDEDUCTEDFROMGROSSPROFITMOSTINCOMESTATEMENTSALSOCONTAINSEVERALOTHERPIECESOFINFORMATIONRELATEDTOTHECOMPANYSP
49、ERFORMANCEFORTHATYEARTHEYINCLUDEEARNINGSPERSHARENETINCOMEDIVIDEDBYTHENUMBEROFSHARESOUTSTANDINGYIELDSTHEPORTIONOFACOMPANYSPROFITALLOCATEDTOEACHOUTSTANDINGSHAREOFCOMMONSTOCKTHEFIGUREISCALCULATEDAFTERPAYINGTAXESANDAFTERPAYINGDIVIDENDSTOPREFERREDSHAREHOLDERS,IFANYAVERAGESHARESOUTSTANDINGTHISISTHEAVERAGENUMBEROFCOMMONSHARESOUTSTANDINGFORTHEREPORTPERIODTYPICALREASONSFORTHENUMBEROFSHARESTOVARYDURINGTHEREPORTINGYEARARETHEDISTRIBUTIONOFSTOCKTOEMPLOYEESUNDEREMPLOYEEINVESTMENTPLANS,OREXECUTIVEBONUSPROGRAMSOCCASIONALLY,WITHAVERAGESHARESOUTSTANDING,ONEENCOUNTERSTHEPHRASE“DILUTED,“WH
