Home Depot Financial Ratio

Improved Essays
Show More
Industry Averages and Financial Ratios
Home Depot is one of the world’s largest specialty retailer stores for home improvement and a one stop shop for people who is considered as do-it-yourselfers. Home Depot offers customers a wide variety of home improvement ideas and support with their customer service. Home Depot has become the leading home improvement store that provides online service, retail, delivery, and do-it-yourself training. The comparison between Home Depot and other similar company within the industry will show the profitability, solvency, and efficiency based on the industry average and financial ratios.
Home Depot management plans to conduct their just in time inventory to facilitate a user friendly environment for its customer. …show more content…
Home Depot financial ratio analysis reflects the improvements in the business attempting to make the vision a reality. The ratio analysis outlines the vision that Home Depot is striving to achieve to stay competitive with similar business. The Home Depot ratio analysis formula includes return on equity which captures the net income, sales, assets and equity of 6.07 + 74754000/41084000 + 41084000/17777000 = 25.52 for 2013, Net Profit Margin: net income/total revenue 4535000/7454000*100 =6.07 for 2013, Account Receivable turnover: net sale/receivables net 74754/1395=53.59 for 2013, Total Assets Turnover: sales/total assets 7475441084-1.819 for 2013. …show more content…
Home Depot stocks looks to be low risk investment because the company is running strong after the housing crisis, continuing to expand, and expecting future gains. Home Depot has over 365,000 employees throughout its 2200 across the United States, Canada, and Mexico. Home Depot’s net income hovers around $5.39 Billion with sales growth up 5.4%. Home Depot industry ratio remained consistently over the past few years for profitability, solvency and efficiency with respectable numbers. The profitability and solvency ratio numbers identified with upper/medium/lower bracket margin of 2.20, 1.00, and 0.60 across the board for quick ratio and return of net worth. The efficiency ratio numbers remained steadily at 32.30, 40.30, and 58.50 for the assets and

Related Documents

  • Improved Essays

    Financial Case Study: Cango Financial Ratio
    • 532 Words
    • 3 Pages

    Financial Case Study: Cango Financial Ratio

    CanGo is off to a good start financially. CanGo has done a great job of not taking on more debt than they can handle. CanGo also has very good current and quick ratios, with a current ratio of 5.39 and a quick ratio of 4.53 it is pretty clear that CanGo could easily pay of their debt if need be and still be able to keep running. CanGo has a working capital of 164,820,000 on again this shows that CanGo is more than capable of paying off its debts. When looking at CanGo’s level of solvency they seem to be doing very well in this area as well with a current debt ratio is40.23%.…

    • 532 Words
    • 3 Pages
    Improved Essays
    Read More
  • Great Essays

    Harley Davidson Case Analysis
    • 595 Words
    • 3 Pages

    Harley Davidson Case Analysis

    Net profit margin 27.32 25.91 24.89 1.813 4.10 Return on equity 30.45 35.72 36.39 29.16 -2.61 Return on assets 17.87 19.34 16.69 9.71 -0.65 Return on Capital 22.33 23.85 22.08 16.06 2.08 Income/Employee 960 1,043 934 655 -55 Revenue Employee 5,342 6,186 15,727 4,782 5,594 Revenue turn over 1.00 1.15 1.02 0.83 0.56 Inventory turnover 61.80…

    • 595 Words
    • 3 Pages
    Great Essays
    Read More
  • Improved Essays

    Case Study: Bravo Consulting Inc.
    • 329 Words
    • 2 Pages

    Case Study: Bravo Consulting Inc.

    If ratio is low, it may indicate that a company may be overstocking or overbuilding its inventory or that it may be having issues selling products to customer. If ratio is high then inventory is sold quickly and is good for the company. The higher the ratio the better. CanGo’s Debt to Equity Ratio, meanwhile, stands at .67 Amazon debt equity ratio is Debt/Equity Ratio measures how much of the company is financed by its debtholders compared with its owners. If the ratio is high then the company has a ton of debt.…

    • 329 Words
    • 2 Pages
    Improved Essays
    Read More
  • Improved Essays

    Kohl's Dupont Analysis
    • 705 Words
    • 3 Pages

    Kohl's Dupont Analysis

    Kohl’s Corporation has a market cap of $ 12,150,841,350 billion, and it is one of the successful store chains in the United States. It offers a variety and exclusive merchandise to customers in an exciting and friendly environment (www.kohlscorporation.com). Also, Kohl’s keeps low retail prices through a low-cost, limited staffing, structure and continuing management information systems, as well as advertising. I use the DuPont analysis for Kohl’s Corporation in order to determine where the company is strong or weak such as the inventory, margins or debt structure. As the results of the DuPont analysis, Kohl’s has a higher ROE for 2010 and 2011 compare to JC Penney; for this reason, Kohl’s earns on shareholder equity for both years.…

    • 705 Words
    • 3 Pages
    Improved Essays
    Read More
  • Decent Essays

    Handy Dan Home Depot
    • 348 Words
    • 2 Pages

    Handy Dan Home Depot

    Where else would you find a customer driven workplace? Where their focus is to be number one in the nation for exceptional customer service. Look no further then The Home Depot (HD) the nation largest home improvement retailer. Carrying a whole array of assortment of building material, Lawn and garden supply. In reference to the article "How the Home Depot Makes Money", the HD strive to make shopping more enjoyable.…

    • 348 Words
    • 2 Pages
    Decent Essays
    Read More
  • Improved Essays

    Home Depot Campaign Comparison Essay
    • 979 Words
    • 4 Pages

    Home Depot Campaign Comparison Essay

    Home Depot’s fiercest competitor is Lowe’s. “Home Depot achieved a growth rate of 8.2% and Lowe’s had a total comparable store sales growth rate of 6.2%”(Opinion: In Home Depot vs. Lowe’s, the winner is, 2015). Although Home Depot had a stronger fiscal year, Lowe’s is the closest competitor in the home improvement industry. In terms of leveraging paid, earned and owned media I will rank each separately on a 1-10 scale, 1 being the lowest and 10 being the highest. For paid media, I would rank Home Depot a 6 out of 10 and competitor Lowe’s an 8. For earned media, I would rank Home Depot a 7 out of 10 and Lowe’s an 8.…

    • 979 Words
    • 4 Pages
    Improved Essays
    Read More
  • Improved Essays

    Differences Between Lowes And Home Depot
    • 238 Words
    • 1 Pages

    Differences Between Lowes And Home Depot

    The Home Depot and Lowe’s operations are extremely similarly with some analyst saying that 90% of their operations are identical. However, when one looks in-depth at these operations, differences are prevalent. One of the most predominant is the differences in the store structures and decor. Home Depot is said to be professional consumer focused with a warehouse design and bright orange paint throughout.…

    • 238 Words
    • 1 Pages
    Improved Essays
    Read More
  • Improved Essays

    Moserk Company Ratio Analysis
    • 709 Words
    • 3 Pages

    Moserk Company Ratio Analysis

    One way these calculations have been developed and analyzed is through the use of ratios. Financial ratios produce a numerical value that can then be compared to other businesses or even to industry averages. The results following the financial statements for the Moserk Company produces interesting outcomes. When compared to the industry averages, there were a few that proved…

    • 709 Words
    • 3 Pages
    Improved Essays
    Read More
  • Great Essays

    Financial Ratio Analysis: Costco And Sam's Club
    • 1945 Words
    • 8 Pages

    Financial Ratio Analysis: Costco And Sam's Club

    1. Introduction 1.1 Background on Financial Ratio Analysis Lenders and investors alike often use financial ratio analysis when determining the performance, solvency, and general business practice of a firm. Ratio analysis can serve as a tool to understand the relationship between quantities, and can be a useful benchmark in the comparison of two or more organizations within a common industry (Faello, 2015). The use of these ratios can determine factors such as asset and debt management, as well as calculating return on equity. By using public source documents, such as a firm’s income statement and balance sheet, a perceptive individual should be able to decipher the data into an organized format, which could reveal major indicators on the…

    • 1945 Words
    • 8 Pages
    Great Essays
    Read More
  • Improved Essays

    Home Depot Diversity Case Study
    • 688 Words
    • 3 Pages

    Home Depot Diversity Case Study

    Home Depot’s Diversity Home Depot’s objective is for all individuals to feel that they are treated fairly, and included. This involves individuals as customers, and employees. This organization pledges, “At The Home Depot Canada, we support and promote diversity as part of your core values. Our diversity and inclusion strategy represents our ongoing commitment to our associates and communities to prove an environment that is, and feels inclusive to all.” (Homedepot, 2015).…

    • 688 Words
    • 3 Pages
    Improved Essays
    Read More
  • Improved Essays

    Analysis Of Home Depot Culture
    • 866 Words
    • 4 Pages

    Analysis Of Home Depot Culture

    Bob Nardelli joined the Home Depot team in 2000, when it was already successful. However, he also joined during a time when the company had grown so rapidly so quickly that changes needed to be made. While he created his own change model, had he known about Kotter and Cohen’s 8-step change model, he may have met fewer challenges (Kotter & Cohen, 2002). When Nardelli first arrived at Home Depot, he was deemed an outsider of a close-knit organization. Nonetheless, the board had made the decision that he was the best person for the task at hand.…

    • 866 Words
    • 4 Pages
    Improved Essays
    Read More
  • Improved Essays

    Home Depot Case Study Solution
    • 1739 Words
    • 7 Pages

    Home Depot Case Study Solution

    A. Suppose the company is considering a potential investment project to add to its portfolio. Calculate the following items: Before Home Depot calculates the net present value (NPV), internal rate of return (IRR), terminal value (TV), and modified internal rate of return (MIRR) of its newest potential investment project, the company must first calculate its free cash flows. The calculation begins by subtracting the operating costs and the 20% depreciation expenses from the cash flows derived from sales revenues. Next, the income tax (35%) is then subtracted from the resulting operating income to arrive at the company’s after-tax earnings before income tax. The final step is for Home Depot to add back the depreciation to the after-tax…

    • 1739 Words
    • 7 Pages
    Improved Essays
    Read More
  • Brilliant Essays

    Financial Ratio Analysis: Superbury's Supermarket PLC
    • 3632 Words
    • 15 Pages

    Financial Ratio Analysis: Superbury's Supermarket PLC

    After a fall in 2010, Morrison has maintained a consistent sales revenue to capital employed level up until 2012. In comparison with Tesco, Morrison has a higher value; which suggests that the firm is using their assets more productively than Tesco to generate sales revenue. This is also reflected in Morrison’s lower trade payables rate and inventory turnover period. Morrison’s value is not too high to suggest overtrading on their assets (Atrill and McLaney, 2011). This ratio helps ordinary shareholders and banks monitor the efficiency in the use of their funds.…

    • 3632 Words
    • 15 Pages
    Brilliant Essays
    Read More
  • Great Essays

    Ford Motor Company Case Study
    • 2346 Words
    • 10 Pages

    Ford Motor Company Case Study

    When the primary ratios for profitability, activity and solvency are multiplied the resulting product will equal the ROE calculation as follows, (Callahan, Stetz & Brooks 2007): Net Profit Margin: Net Income 5,665,000 / Sales 134,252,000 = 4.22 Total Asset Turnover Ratio: Sales 134,252,000 / Average Total Assets 190,554,000 =…

    • 2346 Words
    • 10 Pages
    Great Essays
    Read More
  • Improved Essays

    Walmart Financial Ratio Analysis
    • 1223 Words
    • 5 Pages

    Walmart Financial Ratio Analysis

    Financial ratios are used to compare the performance of one company to the industry average in order to display to investors and the public where the financial components stand. This information is generally located in the company’s business plans. Wal-Mart is a publically traded company, which opened in 1962. Later, “Wal-Mart was listed on the New York Stock Exchange” in 1972 (Wal-Mart, 2014). Like all publically traded companies, Wal-Mart has a Standard Industrial Classification Code (SIC) (United States Department of Labor, 2014) that is used by the government to define the industry in which Wal-Mart is classified under. Because Wal-Mart is a large department store that offers a variety of different types of merchandise it has…

    • 1223 Words
    • 5 Pages
    Improved Essays
    Read More

Related Topics

Ready To Get Started?
Discover
Company
Follow
©2024 Cram.com
Privacy Policy |  About Ads |  Site Map |  Advertise  | 
  • Cookie Settings