Financial: Financial Analysis Of The Home Depot

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Home Depot
Financial Analysis

Overview
This paper is the final project for Finance 300 spring semester class held at Marlboro Grad School and will provide a high level financial analysis of “The Home Depot” a home improvement specialty retailer that enjoys a dominate position in that market space.
The company had 2,269 retail stores worldwide in 2014 and is the largest home improvement retailer in the world. The Home Depot’s stock is traded on the New York Stock Exchange (NYSE: HD).
“The Home Depot revolutionized the home-improvement industry by offering a wide selection of merchandise, low prices, and exemplary customer service to both the professional contractor and the do-it-yourself customer. Before
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The current ratio is a liquidity ratio that measures a company 's ability to pay short-term obligations. Home Depot’s Current ratio is below industry average. It improved during the period from 2013 to 2014 only to decline again to 2011 levels. Quick ratio has also declined during the period. Liquidity problems may arise if cash flow is low, resulting in short term debt payment challenges. Lowes the benchmark company has greater challenges in this area.

Home Depot 01/31/15 01/31/14 01/31/13 01/31/12 01/31/11 Quick Ratio 0.28 0.31 0.34 0.34 0.16 Current Ratio 1.36 1.42 1.34 1.55 1.33

Lowes 01/31/15 01/31/14 01/31/13 01/31/12 01/31/11 Quick Ratio 0.06 0.10 0.09 0.16 0.16 Current Ratio 1.08 1.16 1.27 1.28 1.40

Home Depot Current Ratio

Industry Median: 1.56 vs. HD: 1.06

Industry Standards comparison: http://csimarket.com/Industry/industry_Financial_Strength_Ratios.php?ind=1306 Asset
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Annual Data Jan06 Jan07 Jan08 Jan09 Jan10 Jan11 Jan12 Jan13 Jan14 Jan15
ROIC 20.95 16.57 13.80 9.46 11.22 13.26 15.56 18.48 22.68 26.57
Home Depot Inc Quarterly Data Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15
ROIC 17.26 20.86 30.66 23.46 17.79 23.12 35.91 26.45 23.35 28.40

EVA

12 months ended Feb-15 Feb-14 Feb-13 Jan-12 Jan-11
Net operating profit after taxes (NOPAT) 7,266 6,279 5,570 4,883 4,214
Cost of capital 12.48% 12.45% 12.77% 12.47% 12.45%
Invested capital 32,203 31,785 32,146 31,670 31,406 Economic profit 3,248 2,323 1,465 932 304

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