The Home Depot, Inc.

1
The Home Depot, Inc.

• Judy Christensen
• Betsy Eldridge
• Jack Orimoto
• Acc. 660

2
The Home Depot Competitive Strategy

• Low prices, high volume, lower margin and high
  inventory turnover
  
• Deep Merchandise Selection
• Excellent sales assistance
• Aggressive advertising

3
Major Issues

• Heated competition in the industry
• Financing Challenges

4
Profitability
5
Asset Turnover
6
Financial Leverage
Current Liabilities and Short-Term Liquidity
7
Financial Leverage
Debt and Long-Term Solvency
8
Other Ratios
9
Cash Flow Analysis

• Flow before working capital investments
• Flow available to debt and equity
• Change in overall cash balance

10
Cash Flow Analysis
11
Possible Red Flags

• Increase in inventory and property levels
• Increase in debt financing
• Lack of equity financing

12
Future Suggestions

• Growth at a slower rate
• Leads to positive amount of cash from operations
• Leads to an increase in equity financing

13
The Home Depot, Inc.

• Q A

14
Required vs. Current
15
Capital Required for Expansion
16
Calculation of Cash From Operations