Financial Analysis Home Depot
For Fiscal Year Ending February 3, 2008
Team FAB 5
Financial Analysis of Home Depot
Founded in 1978 by Arthur Banks and Bernie Marcus, who were both fired from a local hardware store after a disagreement with their supervisor (http://founderbios.com/bernie-marcus.php), Home Depot opened its first store in Atlanta, Georgia on June 22, 1979 (www.corporate.homedepot.com). The founders had a vision to create a big-box retail chain that empowered customers to take on their own home improvement and repair projects. As the fourth largest retailer in the U.S. and the world’s largest home improvement retailer …show more content…
4. Based on the composition of the company's CURRENT assets, what problems is the company likely to encounter if its inventories turn over at a much slower than expected rate?
Home Depot's Current assets composition contains mostly inventory, which is listed at $11.731 compared to that of the remaining balance of its current assets that totals $2.943. Consequently, Home Depot depends on a high inventory turnover for its income. As a current asset, its inventories must be able to convert into cash within a short period of time within its operating cycle in order for the company to stay financially healthy. It is noted that the company's operating cycle is approximately 98 days,