Financial Analysis Home Depot Essay - 4398 Words

Financial Analysis of Home Depot For Fiscal Year Ending February 3, 2008 Presented by: Team FAB 5 Financial Analysis of Home Depot Introduction Founded in 1978 by Arthur Banks and Bernie Marcus, who were both fired from a local hardware store after a disagreement with their supervisor (http://founderbios.com/bernie-marcus.php), Home Depot opened its first store in Atlanta, Georgia on June 22, 1979 (www.corporate.homedepot.com). The founders had a vision to create a big-box retail chain that empowered customers to take on their own home improvement and repair projects. As the fourth largest retailer in the U.S. and the world’s largest home improvement retailer†¦show more content†¦That is a great accomplishment for any company but is significantly excellent for a billion dollar company, such as HD. One possible strategy that HD could implement to speed up collections, is to have customers pay for items $100 use a cash or debit card payment method. This would ensure that HD collects on those specific payments immediately, thus decreasing the average outstanding days waiting to receive payment. Unfortunately, this type of strategy could put HD at risk for lost sales due to the customers’ ability to make credit card purchases. On the other hand, HD could provide percentage discounts on outstanding merchandise payment as an incentive to decrease â€Å"account receivable† time. 3. Is the companys inventory turning over at a satisfactory rate? Why or why not? Does the company maintain an adequate level of inventory to meet customer demand? Might it be the case that the company maintains TOO HIGH a level of inventory? Why or why not? Cost of Sales (ending 2/3/2008): $51,352 Inventory (1/28/2007): $12,822 Inventory (2/3/2008) : $11,731 Average inventory(ending 2/3/2008): [pic] Inventory turnover ($51,352 / $12,277): 4.18 times Average days in inventory (365 / 4.18 times): 87.3 days It should be noted, that 80% of HD’s current assets is in merchandise inventory. As such, Home Depot is dependent on selling its inventory to meet its cash obligations. This is notShow MoreRelatedHome Depot Financial Analysis1848 Words   |  8 PagesHOME DEPOT INC. (Note: all $ amounts are stated in millions) PART 1 a) There are 3 years covered in the following primary comparative financial statements, namely fiscal years ended 1 February 2004, 2 February 2003 and 3 February 2002: †¢ Consolidated Statement of Earnings †¢ Statement of Stockholders Equity and Comprehensive Income †¢ Consolidated Statements of Cash Flows There are 2 years covered in the Consolidated Balance Sheet, namely fiscal years ended 1 February 2004 and 2Read MoreHome Depot Financial Analysis1759 Words   |  8 PagesOffice Depot, Inc. (â€Å"Office Depot†), a supplier of a broad assortment of office products and business services throughout the United States and worldwide, announced on February 20, 2013 a merger agreement with OfficeMax, Inc., which will better equip them to compete in the rapidly-changing industry. In fiscal year 2012 alone, Office Depot generated $10.7 billion of revenues from its products and services, yet industry reviews of this company seem unfavorable. 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The Home Depot (NYSE symbol: HD) of the world giant home improvement retailer, has a complex business model that is characterized by its business philosophy, â€Å"stack it high, watch it fly† which reflected a primary focus on sales growth in consumers and construction professionals. At the same time, the company