The Home Depot

THE HOME DEPOT
Justin R. Quillen
ACG2021 002

Executive Summary
For the fiscal year ending on February 1, 2009 The Home Depot was the
worlds largest retailer of home improvement supplies based on net sales.
The Home Depot sales a variety of supplies such as building materials, lawn
care and home improvement items.
Throughout the fiscal year February 1, 2008 to February 1, 2009 there has
been hard economic struggle leading the company in a new direction.
Instead of focusing more on the footage growth they the company stared
focusing more on maximizing productivity in their existing stores.
For the good of the company they decided to close 15 and to remove 50
stores from the new pipeline and exit our EXPO, THD Design Center,
Yardbirds and HD.
http://homedepotar.com/html/downloads/HD_Annual_Report_2008.pdf

Part A. Introduction
• Home Depots CEO is Francis S. Blake
• Their home office is 2455 PACES FERRY ROAD, N.W., ATLANTA,
GEORGIA 30339
• The last fiscal year ended on February 1, 2009
• Home Depot supplies the public as well as contractors with home improving
items, stretching from plumbing, electrical, building materials and lawn and
garden, most anything to help spruce up or build your house.
• The Home Depot is mainly spread throughout the United States with 1,971
stores. There are 262 store also spread out through the countries of Canada,
China and Mexico.

Part A. Audit Report
• The Home Depot uses a independent auditing firm named KPMG LLP .
• The auditors said that Home Depot kept good records and control over their financial
reporting as of February 1,2009, “based on criteria established in Internal Control –
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission.”

Part A. Stock Market Information
• Most recent price of stock as of March 2, 2010: $31.43
• 12 Month Range $17.49-31.55
• Dividend per share .91
• I would say buy because
in a years time the stock
of Home Depot has gone
from 28.75 to 31.50.
http://www.dailyfinance.com/charts/the-home-depot-inc/hd/nys/classiccharts

Part B. Industry Situation and
Company Plans
• Home Depot supplies the homeowner and
contractors with the supplies they need to renovate
and construct homes. Home Depot has three main
customers. The Do-It-Yourselfers, Do-It-For-Me,
and the Professionals.
• For the future, Home Depot has decided to go
back to their core roots with a simple model, ”lots
of products, expert advice and low prices.” To
give great customer service to help the
homeowner with household repair.
http://business.highbeam.com/137336/article-1G1-190851102/back-future-home-depot-relies-its-roots-future-growth

Part C. Income Statement
•The income statement is a single
step format.
2009 2008
Operating Income 4.8B 4.36B
Gross Income 20.7B 22.2B
Net Income 2.66B 2.26B
The difference in income from 2008 to 2009 is very visible. Operating
income is up .44M, Gross income is down 1.5B, and Net Income is up .4 M.

Part C. Balance Sheet
Assets = Liabilities + Stockholders
Equity
2008 41.16B 21.48B 17.78B
2009 40.88B 23.38B 19.4B
•The difference from 2008 to 2009 are Assets
up .28M, Liabilities down 1.9B and Stock
Holders Equity down 1.7B. Liabilities changed
the most at 1.9 B and Stockholders Equity at
1.7B.

Part C. Statement of Cash Flows
•Fund for operations is more for both 2008 and 2009. The difference
for 2008 is 2.14B and for 2009 it is 1.81B.
•They opened 77 store in the 2008 to 2009 year spread out through
the United States, Canada, Mexico and China.
•Home Depot gets a lot of its financing from long term barrowings.
•Cash flow overall has decreased by .2B. From 5.73B to 5.53B.

Part D. Accounting Policies
•Cash equivalents- All investments that have a high
liquidity bought within three months are equal to cash.
• Revenues- It takes into account the net revenue of
returns.

Part E. Financial Analysis
Liquidity Ratios
2009 2008
Working Capital 12.7% 9.4%
Current Ratio 1.3% 1.2%
Receivable Turnover 49.5 47.2
Avg. Days’ Sales
Uncollected
6.8 days 7.3 days
Inventory Turnover 3.9 3.6
Avg. Days’ Inventory on
hand
92.5 days 89.9 days

Part E. Financial Analysis
Profitability Ratios
• Profit margin: 2008-25.99B 2009-23.99B
• Asset turnover: 2008-1.6 2009-1.7
• Return on assets: 2008-9.1% 2009-5.29%
• Return on equity: 2008-20.56% 2009-12.74%
• From 2008 to 2009 profit margin dropped 2billion dollars. Asset
turnover went up and return on assets and equity went down.

Part E. Financial Analysis
Solvency Ratio
• For 2008 the debt to equity ratio was .64 and in
2009 it was .54 since the economy has been down
Home Depot has slowed down on expanding so
in turn they are not buying more properties and
starting new projects so their debt to equity has
gone down.

Part E. Financial Analysis
Market Strength Ratios
• Price/earnings per share 2008- .45 2009-
.41
• Dividend yield in 2008 was 2.26% and in
2009 was 3%.