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The Home Depot: Stock Or No Stock

949 words - 4 pages

The company I have chosen to research for my final paper is Home Depot. Home Depot’s principal assets, debt and stock information as of January 30, 2001 are as follows: (amounts in millions, except stock)
Principal assets
Merchandise Inventory – 10,625
Property and Equipment - 25,060
Long-term debt – 8,707
Other long-term liabilities – 2,135
Stock – Common Stock, par value $0.05, authorized: 10 billion shared
Issued – 1.722 billion shares
Outstanding – 1.623 billion shares

Home Depot was started in 1978 as a one-stop shopping for do-it-yourselfers. As the fastest growing retailer in U.S. History, Home Depot went public on NASDAQ in 1981, and moved to the New York Stock Exchange in 1984. By 1989, Home Depot had opened its 100th store. In 1994, Home Depot moved into Canada with the acquisition of Aikenhead’s, in 2001, they moved into Mexico with the acquisition of Total Home. Home Depot acquired The Home Way in China in 2006.
Home Depot’s slogan, “More saving. More Doing.”, promotes Home Depot’s marketing strategy with more appeal for customers with less money to spend. Home Depot carries major brands but also carries Home Depot exclusives and proprietary brands which save customers money. Home Depot carries major brands like Dewalt, Hampton Bay, Homelite, and Martha Stewart Living. They also carry proprietary brands such as Ryobi, Rigid, Behr, LG and Toro.

Home Depot Inc. (NYSE: HD)
Ratio Home Depot Lowes Comments
Liquidity Home Depot and Lowe’s have very similar numbers all the way down
Current Ratio 1.33 1.40 Lowes has a slightly better current ratio
Acid-test Ratio 0.16 0.16 They both have enough current assets to satisfy current liability
Capital Structure and Solvency Both companies have similar debt to
Total debt to equity 0.89 0.86 equity and long term debt to equity
Long-term debt to equity 0.59 0.47
Return on Investment
Return on assets 0.06 0.05 Both companies are asset heavy
Return on common equity 0.17 0.11 Home Depot has a slightly better return
Operating Performance
Gross profit margin 0.34 0.35 Both companies are efficient in production
Operating profit margin (pretax) 0.09 0.08 Of their products
Net profit margin 0.05 0.04
Asset Utilization
Cash turnover 69.17 76.04 Both companies have a good cash turnover
Inventory turnover 4.29 3.82
Total asset turnover 1.68 1.46
Market Measures
Price-to-earnings 18.08 17.78 Very interesting how close all the numbers
Earnings yield 0.06 0.06 Are between Home Depot and Lowe’s

Home Depot changed the way consumers shop for and improve their homes. They changed the whole home improvement industry with the opening of their first warehouse home improvement store, encouraging the do-it-yourselfers with the ease of getting all the products they need under one roof. Home Depot also makes it easy for the Professional contractors, offering the Pro Counter that has employees there to help the professionals get the products...

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