Industry Averages and Financial Ratios
Dewayne Darling, Barbara Matthews, Doris McKenzie, John Gross, Neval Brunson
FIN/370
November 03, 2014
Cindy Bayer
Industry Averages and Financial Ratios
Home Depot is one of the world- largest specialty retailer stores for home improvement and a one stop shop for people who is considered as do-it-yourselfers. Home Depot offers customers a wide variety of home improvement ideas and support with their customer service. Home Depot has become the leading home improvement store that provides online service, retail, delivery, and do-it-yourself training. The comparison between Home Depot and other similar company within the industry will show the profitability, solvency, and efficiency based on the industry average and financial ratios.
Home Depot management plans to conduct their just in time inventory to facilitate a user friendly environment for its customer. Home Depot planned to widen the aisle for their products, and have large colorful depicting the items on those aisles. Home Depot employee would help direct customers to the aisle for the products they need.
Home Depot managed to stay ahead its competitors with the CEOs strategic visions to simplify the layout of the store for the average day person. Home Depot financial ratio analysis reflects the improvements in the business attempting to make the vision a reality. The ratio analysis outlines the vision that Home Depot is striving to achieve to stay competitive with similar business. The Home Depot ratio analysis formula includes return on equity which captures the net income, sales, assets and equity of 6.07 + 74754000/41084000 + 41084000/17777000 = 25.52 for 2013, Net Profit Margin: net income/total revenue 4535000/7454000*100 =6.07 for 2013, Account Receivable turnover: net sale/receivables net 74754/1395=53.59 for 2013, Total Assets Turnover: sales/total assets 7475441084-1.819 for 2013. The
Home Depot has become a household name with loyal customers. Home Depot stocks looks to be low risk investment because the company is running strong after the housing crisis, continuing to expand, and expecting future gains. Home Depot has over 365,000 employees throughout its 2200 across the United States, Canada, and Mexico. Home Depot- net income hovers around $5.39 Billion with sales growth up 5.4%. Home Depot industry ratio remained consistently over the past few years for profitability, solvency and efficiency with respectable numbers. The profitability and solvency ratio numbers identified with upper/medium/lower bracket margin of 2.20, 1.00, and 0.60 across the board for quick ratio and return of net worth. The efficiency ratio numbers remained steadily at 32.30, 40.30, and 58.50 for the assets and sales.
Home Depot has made strives to provide best products and service to its customers. Home Depot has become the leading home improvement store that provides online service, retail, delivery, and do-it-yourself training. Home Depot plans to attain and reach their goal by generating at least $78 Billion in revenues by the end of 2015
References
Retrieved Nov 2014 from: http://www.mergentkbr.com.ezproxy.apollolibrary.com/index.php/reports/industry
Retrieved Nov 2014 from: www.osha.gov/pls/imis/sicsearch.html
Retrieved Nov 2014 from:www.marketwatch.com/investing/stock/hd/profile
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