Home Depot Case Study

Register to read the introduction… Finance and Annual Report). Net Earnings achieved $3.7 Billion (17.1% increase from January 2001), where $1 Billion was earned in the 2nd quarter. Return on Investment Capital reached 18.8%, a 50 basis point increase from 2001, which reflects management efficiency and asset control (Hunger and Wheelen) (Annual Report). Earnings Per Share improved by 21%, because of Home Depot’s repurchase of 69 million shares. This repurchase of Treasury Stock avoided a diluted effect in per share calculation (Annual Report). Activity Inventory Turnover | 5.3x | Decrease from 2001 | Days in Inventory | 75.8 days | Considerable Increase Since 2000 | Average Collection Period | 6.72 days | Increasing Trend Over 5-year Period | Accounts Payable | 42 days | Growth from 2001 34 days | | Days in Cash | 13.71 days | Decrease of 17% | Asset Turnover | 1.95 | Decreased from 2.05% | | High inventory levels at any given time were a pattern for Home Depot in 2002. This resulted in a decline of average inventory goods sold during the period. On the contrary, the Average Collection Period for Accounts Receivable increased, reflecting a longer waiting period for receipt of customer payments for sales. In addition, during 2002, Home Depot experienced growth in Days Accounts Payable Outstanding, due to changing payment terms. The change has benefited Home Depot by allowing flexibility and assistance in maintaining its growth initiatives. At 2002 sales levels, Days in Cash decreased by 17%, though not a problem for Home Depot (Annual Report). Leverage Debt to Asset Ratio | 34% | Same Level from 2001 | Debt to Equity | 52% | Leveraged | | Long-term Debt to Equity | 6.70% | Limited Long-term Borrowing | Current Liabilities to Equity | 41% | Well-Leveraged Short-Term Financing | Home Depot’s financial strength and leverage ranks among the best in retailing (Yahoo! Finance). Home Depot has consistently limited the use of borrowed funds to finance assets. Although the Debt-to-Equity ratios have risen slightly over the 5-year period, Home Depot is adequately leveraged with funds from creditors and owners. In addition, short-term financing obligations are leveraged with equity and strong liquidity (Annual Report). B. STRATEGIC POSTURE Values and Vision Associates are central to Home Depot’s success and our values are part of the fabric of the company. Values are beliefs that do not change over time. They are what we believe in, what we do, and what govern our decisions on a day-to-day basis. They are the principles and standards for the framework upon which Home Depot is built. Home Depot’s unique culture is built on associate dedication and a commitment to an “orange-blooded” entrepreneurial spirit. 1. Taking care of our people: The key to our success is treating people well. We do this by encouraging associates to speak up and take risks, by recognizing and rewarding good performance and by leading and …show more content…
CORPORATE STRUCTURE

Home Depot, Inc. is looking to organize and establish dominance globally. To achieve this goal, the corporation began to locate several stores in one market. The reasoning behind this is to establish multiple units in a single marketplace to create dominance. This move can be seen as a threat to the company. Third quarter sales dropped due to this move. Therefore Home Depot, Inc. may want to consider locating stores farther apart and may want to diversify store locations.

B. CORPORATE CULTURE

The Home Depot. Inc., founded in 1978, is the world’s largest DIY retailer. To achieve this global status, the corporation has diversified the types of stores in operation. Included in this strategy are Home Depot Stores, EXPO Design Centers, Home Depot Supply Stores, Home Depot Landscape Supply Stores, Home Depot Floor Stores, etc. The company is widely known and is traded on the New York Stock Exchange under the symbol “HD.”

C. CORPORATE RESOURCES

1. Marketing

Home Depot, Inc. is big on customer service and providing expertise to the DIY consumer. To achieve this, only the most qualified and knowledgeable associates are hired to provide the best customer service possible. Also, in order to attract the largest consumer outreach possible, the company provides only the best quality products with everyday lowest prices because of direct purchasing from