Verified Document

Financial Analysis Home Depot Research Paper

Financial Analysis: Home Depot Summary of Operations

Net Sales

Gross Margin

Operating Margin

Income before Taxes

Net Income

Financial Position

Working Capital

Property, Plant and Requirement

Total Assets

Long-Term Assets

Stockholders' Equity

Financial Ratio Analysis and Interpretation

Historical View of Financial Performance

Competitor and Industry Standards Comparison

The relevance of subjecting the financial statements of a company to intensive analysis cannot be overstated. This is more so the case given that the information obtained from such an analysis comes in handy in the determination of a company's financial health as well-being. In this text, I concern myself with the analysis of Home Depot's financial statements in an attempt to not only determine but also assess its financial performance and stability.

Summary of Operations

Net Sales

From the onset, it is important to note that with regard to net sales, Home Depot showed significant improvement throughout the three years under consideration. Between the financial years 2011 and 2012, the net sales figure increased from $67,997 million to $70,395 million. This essentially represents a 3.53% increase in the net sales figure. It is also important to note that between the financial years 2012 and 2013, the net income registered yet another increase of 6.19%.

Gross Margin

The company's gross profit margin for the three years under consideration was 1.33, 1.55,...

The same increased by 15.08% and 19.00% between the years 2011-2012 and 2012-2013 respectively.
Net Income

Lastly, we have the net income. Like the net sales figure, the net income figure registered impressive growth within the three years under consideration. Between the years 2011 and 2012, the net income figure increased by 16.33%. Similarly, between the financial years 2012 and 2013, the net income figure increased by 16.79%.

Summary/Interpretation

The growth in the income figures in this case is impressive. If the company manages to contain its costs going forward, the increase in income will further enhance shareholders' value. When it comes to the gross margin, it is important to note that the same comes in handy in the determination of how much gross profit a business entity earns from the sale of goods and services. The company's gross profit margin in this case was largely stable, i.e. It did not fluctuate significantly during the three years under consideration. This is an indicator that the company is not likely to face challenges in the settlement of operating and other expenses going forward.

Financial Position

Working Capital

The company's working capital ratio/current ratio…

Sources used in this document:
Financial Ratio Analysis and Interpretation

To begin with, liquidity ratios come in handy in the determination of a business entity's ability to settle its financial obligations in the short-term. The current asset ratio in this case indicates that Home Depot would not have had trouble settling its obligations were they to suddenly fall due at any point. Although the quick ratio for the years 2013 and 2011 paints a grim picture of the firm's ability to settle its obligations using its most liquid assets, the industry average indicates that the Home Depot still has sufficient liquid assets to cover its current liabilities.

When it comes to the leverage ratios, the debt ratio in the words of Davis and
Cite this Document:
Copy Bibliography Citation

Related Documents

Financial Analysis of Home Depot
Words: 2116 Length: 7 Document Type: Research Paper

Home Depot is a retailer of home improvement supplies, and Lowe's is its biggest rival. Both are very large companies, and they have a lot of similarities. Both companies competes only in this one industry, focused on big box retailing of home improvements and home finishings. These are considered to be category killers, in that once they enter a market few other firms can exist in that market selling the

Home Depot Vs Lowes for Better Investment
Words: 2253 Length: 8 Document Type: Term Paper

Finance for the Nonfinancial ManagerIntroductionHome Depot and Lowes are two of the largest home improvement store chains in the United States. Both companies were founded in the 1970s, and they have since grown to become leading retailers in the home improvement industry. The industry itself is sizable, with an estimated worth of over 600 billion dollars in the United States alone. Home Depot and Lowes hold a significant share of

Home Depot
Words: 1525 Length: 6 Document Type: Research Paper

Home Depot is the largest home improvement retailer in the world and one of the biggest retailers. It has consistently grown over the past decades, since its start at the end of the 1970s, and has expanded into Canada, Mexico and China. It has diversified its network of suppliers and continues to offer a large array of products to its clients. Competition remains significant, both with the presence of Lowe's on

Home Depot Is the Second Largest Retailer
Words: 1411 Length: 5 Document Type: Case Study

Home Depot is the second largest retailer in the world, but like every other company there are issues that can make even this business more productive. The home products market is very competitive around the world and The Home Depot has taken advantage of much of the American market while leaving the international market largely untouched. This analysis will diagnose the company's situation, determine what issues need to be addressed

Home Depot Vs. Lowes Executive
Words: 8368 Length: 21 Document Type: Term Paper

Apart from that there is another type of risk which can surface even in case the market continues its upward march. In the event employees exercise their ESOPs in huge numbers, external shareholders could oppose the diluting impact of these option grants on the value of their shares. A situation might crop up that old possible tensions among employee interests and shareholder interests are not all of a sudden

Home Depot
Words: 611 Length: 2 Document Type: Term Paper

Home Depot Industry overview about home depot and its position in the Market in comparison to its closest competitor Lowe's Home Depot Inc. became a corporation in 1978 and currently has over 1500 stores. The stores are full service warehouse style, stores that sell more than 40,000 products related to home improvement. (HD Full Description) Multex Investor also reports that, Home Depot operates four wholly owned subsidiaries: Georgia Lighting, Inc., Apex Supply Company,

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now