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The Home Depot
A paper submitted to Webber International University in partial fulfillment of the Bachelor Degree in Business Science Administration
Elizabet Rodriguez
April 2, 2013
Principles of Finance
Financial Statement Analysis
Dr. Jeannette Eberle
Index
ITitle Page1
IITable of Contents2
IIIBrief Introduction and Organizational Structure 4
IVBrief Discussion of Products, Services and Markets 5
VSummary of Financial Statements 6
VI.Ratio analysis 13
VIIDiscussion of Stock Valuation Issues 18
VIIIDiscussion of Capital Structure 20
IXGrowth Strategy and Tactics20
XRisk Exposures 22
XIAnalyst Opinions and Professional Assessments 23
XIICurrent Events 24
XIIIConclusion 25
XIV Bibliography 28
Introduction
Bernie Marcus and Arthur Blank founded Home Depot, in Atlanta, Georgia (1978). With their store, Marcus and Blank revolutionized the do-it-yourself home improvement market in the United States. Home Depot began as a very basic store, operated in a large, no-frills warehouse. However, Home Depot now carries over 35,000 products, with national brand names along with Home Depot’s brands as well. At the start, Home Depot was able to offer exceptional customer service with knowledgeable employees who could guide customers through home renovation projects. Since its opening, Home Depot has experienced incredible growth, and today is North America's second largest retailer, and the largest home improvement retailer. Internationally, Home Depot has expanded into Canada, Mexico, and is beginning to operate stores in China. Home Depot's competition includes Sears, Ace Hardware and Lowes (the main competitor). All these events, along with new competitions, lead to new investments, market evaluations, and strong decisions that management has had to overcome. In the end, it all comes reflected in the financial statements, which are the key to any big corporation. Organizational Structure
Home Depot’s multidivisional organizational structure is collaborative with its current corporate structure. Advantages of the multidivisional structure include: emphasis of rapid growth, augmented facilitates management development and training, utilization of decentralized decision-making, enhancements towards profit and loss responsibility, and overall accountability. This system is more costly than other organizational structures, but Home Depot’s rapid growth and increasing profits warrant the added expense. Home Depot Management is layered so there are both vertical and horizontal linkages among the firm’s management. The bottom of the structure consists of store department managers governed by one store manager responsible for delegating duties and upper management’s directives. The store manager reports to a regional manager with connections to all the firms’ functional departments. The functional departments include information services, legal matters, advertising and merchandise accounting along with many other core functional departments. The functional departments are positioned, on the organizational structure, in order to remain accessible by all of the stores through their regional manager, and positioned below the geographic divisional presidents and upper senior management. All of the operations’ departments share horizontal linkages facilitating data sharing through implementation of satellite communication systems and advanced computer network systems. Senior Management even has direct linkages to individual stores through their own television network, HDTV. This allows the senior management to receive feedback from local managers and allowed current training and communications programs to be monitored in individual stores. Products, Services, and MarketsHome Depot offers a variety of innovative merchandise and services. The...
A paper submitted to Webber International University in partial fulfillment of the Bachelor Degree in Business Science Administration
Elizabet Rodriguez
April 2, 2013
Principles of Finance
Financial Statement Analysis
Dr. Jeannette Eberle
Index
ITitle Page1
IITable of Contents2
IIIBrief Introduction and Organizational Structure 4
IVBrief Discussion of Products, Services and Markets 5
VSummary of Financial Statements 6
VI.Ratio analysis 13
VIIDiscussion of Stock Valuation Issues 18
VIIIDiscussion of Capital Structure 20
IXGrowth Strategy and Tactics20
XRisk Exposures 22
XIAnalyst Opinions and Professional Assessments 23
XIICurrent Events 24
XIIIConclusion 25
XIV Bibliography 28
Introduction
Bernie Marcus and Arthur Blank founded Home Depot, in Atlanta, Georgia (1978). With their store, Marcus and Blank revolutionized the do-it-yourself home improvement market in the United States. Home Depot began as a very basic store, operated in a large, no-frills warehouse. However, Home Depot now carries over 35,000 products, with national brand names along with Home Depot’s brands as well. At the start, Home Depot was able to offer exceptional customer service with knowledgeable employees who could guide customers through home renovation projects. Since its opening, Home Depot has experienced incredible growth, and today is North America's second largest retailer, and the largest home improvement retailer. Internationally, Home Depot has expanded into Canada, Mexico, and is beginning to operate stores in China. Home Depot's competition includes Sears, Ace Hardware and Lowes (the main competitor). All these events, along with new competitions, lead to new investments, market evaluations, and strong decisions that management has had to overcome. In the end, it all comes reflected in the financial statements, which are the key to any big corporation. Organizational Structure
Home Depot’s multidivisional organizational structure is collaborative with its current corporate structure. Advantages of the multidivisional structure include: emphasis of rapid growth, augmented facilitates management development and training, utilization of decentralized decision-making, enhancements towards profit and loss responsibility, and overall accountability. This system is more costly than other organizational structures, but Home Depot’s rapid growth and increasing profits warrant the added expense. Home Depot Management is layered so there are both vertical and horizontal linkages among the firm’s management. The bottom of the structure consists of store department managers governed by one store manager responsible for delegating duties and upper management’s directives. The store manager reports to a regional manager with connections to all the firms’ functional departments. The functional departments include information services, legal matters, advertising and merchandise accounting along with many other core functional departments. The functional departments are positioned, on the organizational structure, in order to remain accessible by all of the stores through their regional manager, and positioned below the geographic divisional presidents and upper senior management. All of the operations’ departments share horizontal linkages facilitating data sharing through implementation of satellite communication systems and advanced computer network systems. Senior Management even has direct linkages to individual stores through their own television network, HDTV. This allows the senior management to receive feedback from local managers and allowed current training and communications programs to be monitored in individual stores. Products, Services, and MarketsHome Depot offers a variety of innovative merchandise and services. The...
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