...Financial Statements Part 1 Accounting 497 Financial Statements Part 1 Financial statements provide investors, creditors, and employees with important information related to a company’s overall performance. Public traded companies are required by the Securities and Exchange Commission to release financial statements on quarterly and annual basis. The three main statements included in the annual report include the consolidated statement of earnings, balance sheet, and statement of cash flows. This paper will analyze Home Depot, Inc. 2008 annual report. The Home Depot, Inc. The Home Depot is a public “do-it yourself” home improvement and construction retailer. The Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank (depot, 2015). The company’s website states that “today The Home Depot is the world’s largest home improvement specialty retailer, with more than 2,200 retail store in the United States (including Puerto Rico and the U.S. Virgin Islands), Canada, and Mexico” (depot, 2015). The Consolidated Statements of Earnings The consolidated statement of earnings or commonly known as the income statement is a financial statement that measures a company’s financial position over a specific accounting period. The statement includes: revenues, expenses, gains and losses. The fundamental equation used to generate the income statement is Revenues-Expenses=Profit or Loss. A consolidated statement of earnings combines all major expense accounts into broad categories...
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...Financial Statements Paper Part 1 ACC 497 July 14, 2014 Financial Statements Paper Part 1 In Financial Statements Paper Part 1 I will discuss The Home Depot’s annual report, to include the consolidated statement of earnings, the balance sheet, and the statement of cash flows. I will discuss some details of each sheet, the importance of the contents, business decisions associated with each sheet, and the benefits gained from the information contained in the sheets. The Consolidated Statement of Earnings-- income statement-- tells the reader about the sales and expenses applied by The Home Deport during the most recent fiscal year. An immediate analysis of this income statement indicates the company has net sales figures between $70 billion and $80 billion per year. This is a significant difference over a three year time period. The one very noticeable issue is the substantial decrease in sales from 2008 to 2009. The Home Depot´s net sales in 2008 dropped roughly eight percent compared to the previous year. Operating expenses increased by approximately 105%, while operating income decreased by about 40%. The increase in operating income helped bring the numbers up, but after it is all said and done, the bottom line is the fact that net earnings were down approximately 49% in 2008 compared to the previous year. The Home Depot attributed the significant decline in sales to the decline in the residential (new) construction and home improvement markets. In addition...
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...Larissa Galberth Financial Statements Paper Part 1 University of Phoenix ACC/497 Bob Davis Proper interpretation of the information found in a company’s financial statements is vital for everyone affected by the actions of the company. Those affected include potential investors and current stakeholders, including stockholders, employees, vendors and lenders. All of these people must be able to make business decisions based on information found in financial statements. This paper will identify the purpose of financial statements based on the information found within the financial statements of the Home Depot. What does the income statement tell you about the company? Why is the statement important? What business decisions could be made using the income statement? Often referred to as the profit and loss statement an income statement is a document used for determining profitability. It shows a company’s revenue, gross margin, operating expenses, total expenses and net income. Shareholders continuously inspect the income statement of companies in which they have invested interest to ensure that their investment remains strong and profitable. The Home Depot 2008 income statement shows that this is a company with strong sales with $70 million in sales per year. Although the Home Depot is a strong sales company the income statement shows that there was a substantial drop in sales in 2009 as opposed to previous years. This statement is important to investors and lenders. Seeing...
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...Financial Statements Paper Part I ACC/497 March 7, 2016 Financial Statements Paper Part I Financial statements allow users to view company performance, analyze past trends, project future performance, and make essential business decisions regarding investing into the enterprise. The consolidated statement of earnings, balance sheet, and statement of cash flows are a few of the reports users may look to find crucial information regarding the business. Reviewing The Home Depot's financial statements offers a glimpse into how the company performed during the 2008 and 2009 fiscal years and what business decisions should be made based upon the company's reports. Consolidated Statements of Earnings The consolidated statement of earnings, the income statement, displays relevant business information to users to predict future cash flow by evaluating past trends of a company, forecasting future performance, and assess risks of achieving future cash flows (Kieso, Weygandt & Warfield, 2013). The income statement contains elements such as revenues, expenses, gains, and losses. In Home Depot’s income statement information depicts a steady decline in gross profits, operating income, net earnings, and earnings per share, while they reported an increase in operating expenses. Gross profits declined from 2007 to 2009 from $26.5 billion to $23.9 billion. Operating income decreased by half from $8.8 billion to $4.3 billion in 2009. Net earnings dropped from $5.8 billion to $2...
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...Financial Statements Paper - Part I Bridgette Toutant ACC/497 March 31, 2014 Ken Goranson Financial Statements Paper - Part I A financial statement offers users, such as management, board of directors, and potential investors, information related to the company’s activities and it gives them the ability to make decisions in relation to the company. A certain amount of urgency should exist when providing this useful information because the financial statements are considered to be a powerful and commonly used tool. The most commonly used of all the financial statements would be the income statement because it can be used to examine the profits and losses of a company. Many users do also find that the balance sheets and cash flow statements just as useful in the decision making process. The following will include the analysis of Home Depot’s annual report by examining the income statement, balance sheet, and cash flow statement and looking at how they can help with business decisions. The Consolidated Statements of Earnings, the income statement, tells the user about the sales and expenses of Home Deport during each fiscal year. Analyzing the income statement for Home Depot, it appears that the company had strong sales numbers of over $71 billion each year. Even though the company was able to keep sales over $71 billion, it is noticeable that the sales and gross profits declined from 2007 to 2009 (The Home Depot, 2009). It also seems that an increase in expenses...
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...Financial Statements Papers Part I Sherrie Christian ACC/497 April 8, 2013 Rick Kwan, MBA Financial Statements Papers Part I The financial statements are important as they inform the users of the economic health and stability of the entity. Each financial statement provides information to determine economic health, such as financial position, performance, and changes. Assets, liabilities, and equity provide a measurement of financial position. Income and expenses provide a measurement of performance. The income statement is a vital section of the financial statements, also known as the profit and loss statement. The income statement presents revenue balances, and profits for a specific period of reporting. The income statement presents sales, cost of sales, operating and non-operating expenses, and the income for the prior three reporting periods. The income statement presents awareness of changes or the lack of changes in the sales balances, cost of sales, and operating and non-operating expenses. The income statement provides comparisons of prior reporting periods to current reporting periods. The income statement measures the business performance in terms of revenue, and net income. Managers practice income statement analysis to work out inefficiencies, and processes that are ineffective. Revenue, expenses, and net income are the major parts of the income statement. A financial statement user can view the Home Depot Statement of Earnings for the fiscal year ending...
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...Financial Statement Part 1: The Home Depot, Inc. Brenda Ocampo ACC 497 November 25, 2013 Rick Kwan The Home Depot, Inc Annual Report The Home Depot, Inc. had their retail sales decline by 7.8 percent. Even though there was a bad economic time for all stores this store strived to provide better customer service, invested in the sales associates, and rebuilt their supply chain. These decisions helped optimize their capital allocation and allowing them to concentrate more on efforts on the core business. In the first quarter of 2008 The Home Depot, Inc decided to close 15 underperforming stores and still making an operating profit and $41 billion in assets. Any business needs to be able to look at and analyze their Income Statement, Balance sheet, and Statement of Cash Flow to help determine if they are successful and if they need to make any adjustments to the business operations to make it more successful. Income Statement The Consolidated Statements of Earnings tells how the business is doing in performance and profit. This statement shows the gross profit growth, operating expenses, operating income, and earnings from continuing operations before provision for income taxes, and the earnings from continuing operations. The statement for The Home Depot, Inc. shows how the business had a decrease in fiscal year 2008 of 7.8% and a decrease in Net sales. The Home Depot, Inc. reported Net Earnings of $2.3 billion in fiscal year 2008 compared to...
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...Group report The Home Depot, Inc. and Canadian Tire Corporation Financial Statement Analysis Part A Description of Retail Industry: Retail is the process of selling consumer goods and/or services to customers through multiple channels of distribution to earn a profit. Demand is created through diverse target markets and promotional tactics, satisfying consumers' wants and needs through a lean supply chain. In the 2000s, an increasing amount of retailing is done online using electronic payment and delivery via a courier or postal mail. Retailing includes subordinated services, such as delivery. The term "retailer" is also applied where a service provider services the small orders of a large number of individuals, rather than large orders of a small number of wholesale, corporate or government clientele. Shops may be on residential streets, streets with few or no houses, or in a shopping mall. Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or full roof to create a more comfortable shopping environment protecting customers from various types of weather conditions such as extreme temperatures, winds or precipitation. Online retailing, a type of electronic commerce used for business-to-consumer (B2C) transactions and mail order, are forms of non-shop retailing. Retail Industry competitive environment: Retail industry is a highly competitive industry. Recently, as technologies advances dramatically, traditional retailers have been transforming...
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...Audit of Home Improvement Retailors Home Depot and Lowe’s are both large successful home improvement retailers. This paper discusses the background of both companies and goes into detail about the financial ratios including profitability and liquidity ratios. The paper also discusses business risks, audit risks, and the proper audit procedures that are necessary. The paper focuses on audit procedures of three important asset accounts: Cash, inventories, and accounts receivable. Team Members: Julie November Shuai Guo Wenqian Zhu Yusi Zeng Zongxian Wang Background Yusi Zeng No matter if customers are a homeowner, renter, or Pro customer, as long as they are creators and want improve their houses, they would seek quality tailored experiences, and are on the lookout for new ideas to improve homes. The home improvement industry or hardware stores, in terms of public companies was an industry once ran by smaller companies and is now dominated by some of the largest retail companies in the world. DIY or do it yourself has become the business and in the United States Home Depot and Lowe's are the two largest competitors and are currently changing the landscape of the industry. Both of them are among the the many businesses, including home centers, paint stores, hardware stores, lumber yards and garden centers. The industry growth is very limited, and very slow...
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...but on an adjusted basis declined 6.7 percent. At the end of 2008, the U.S. economy was in the most severe recession it has experienced since the great depression. We planned for this tough economic environment, and we executed well against our plan, exceeding the sales and earnings targets we set forth at the beginning of the year. We gained over 100 basis points of U.S. market share in 2009, a notable accomplishment on a base of fewer stores. We saw sequential improvement in our performance during the year and exited the year with a positive comp in the fourth quarter. We also saw signs of stabilization in some key macroeconomic indicators, such as Private Fixed Residential Investment as a percent of GDP. In Canada, the demand for home improvement products is showing improvement. And our Mexican team delivered positive comps for the year in a very tough economic environment. As we look to 2010, we believe we will see modest economic recovery in the markets we serve and expect our performance to continue to improve as the economy undergoes a steady, though slow, recovery. As a company, we made significant progress against our strategic imperatives in 2009. We enhanced customer service in our stores, introduced new and innovative products with compelling values, and drove productivity and efficiency. Our customer service levels, as measured by our Voice of the Customer surveys and other external sources, continue to improve. A key factor in this improvement was the...
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...The Consolidated Statements of Earnings or the income statement tells financial statement users that there was a decrease in gross profit and net sales for the fiscal year 2008. The Consolidated Statements of Earnings show that the closing of underperforming stores, removal of new store openings from the pipeline, and staff reductions in many Home Depot projects resulted in $951 million in pretax charges. The difference profit and net sales is also a cause of fiscal year 2008 being 52 weeks and fiscal year 2007 53 weeks. That extra week in 2007 accounted for $1.1 billion in net sales that was noted in the financial statements. Even though there was an extra week in 2007, the total operating expenses in 2008 were higher. The income statement is important because it shows the profitability of a company during a certain time interval, normally a 1 year period. The income statement shows financial statement users the expenses, revenues, gains, and losses of a company. Reviewing the income statement can help make many. The income statement can provide investors make decisions about an organizations future economic viability. Home Depot’s income statement can be used to cut expenses out of their budget. Inventory related expenses could be reduced by decreasing storage expenses. The income statement also gives Home Depot information based on customer transactions and the average ticket sale. Teams may be able to take this information and use it to put together a strategy...
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...CONFORMING LETTER Home Depot Inc. Dear Home Depot Inc. Management, As a partner of KNAM LLC, it is my pleasure to present you with the results of our initial review. Included with these results is our assessment of Home Depot Inc.’s performance is our proposition of areas we’d like to review further to determine improvements, efficiency, functionality, and health of your organization. Background Your organization’s core service is in the DIY home improvement market. You sell goods that consumers need for home improvement as well as advice on said projects, contracting services, lawn and garden, and appliances and tools. Your organization was founded in 1978 with the purpose of providing DIY one-stop shopping. Since inception, Home Depot Inc. has grown to become a multinational company with foundations strongly in the United States with roots in the Canadian, Mexican, and Chinese markets. Shortly after inception, Home Depot Inc. enlisted on NASDAQ and the NYSE. Your company has seen considerable growth in its main business as well as developments in subsidiary businesses and services. Home Depot Inc. has become one of the fastest growing retailers in America and as such, you would like to review the operations of your organization to determine areas of further growth and areas that may need to be leaner. Objectives of the Operational Review As a result of our initial review and interviews with your executive management...
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...Primary Competitor Analysis Competitor Name: The Home Depot, Inc Headquarters: Atlanta (Cobb County), Georgia Locations: 2,200 Retail Stores in U.S., Canada, and Mexico Annual Revenue: 2013-$74,754,000,000 2014-$78,812,000,000 2015-$83,176,000,000 Slogan/Motto: “More saving. More doing.” Primary Products: -Building Materials (40,000 different kinds) -Tools/Hardware -Appliances (kitchen/bath/décor) -Lawn and Garden Products -Electrical, Plumbing, Flooring, & Heating/Cooling Supplies Primary Services: -Home Depot Home Services (national installation service with pre-screened independent contractors) -Free How-To Clinics -Kids Workshops Primary Target Market: The Home Depot’s primary target markets are the do-it-yourself customer, the do-it-for-me customer, and professionals. This mainly includes Generation Y white, Hispanic, and black males, across the United States with pretty much any education level. Distribution Strategy: Network of distribution centers for store replenishment and ...
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...The Home Depot 2008 Annual Report Dear Shareholders: In 2008, our retail sales declined by 7.8 percent, with comp sales down 8.7 percent. Our adjusted earnings per share from continuing operations declined 22 percent. In ordinary times, these would be very disappointing results. But 2008 was not an ordinary year. Despite the difficult economic environment, we continued to improve our retail business, through investing in our associates and our stores, rebuilding our supply chain and improving customer service. We also made several strategic decisions to optimize our capital allocation, concentrating our efforts on our core business. In the first quarter, we closed 15 underperforming stores and reduced our pipeline of new stores by 50. In the third quarter, we renegotiated our private label credit card agreement, capping our cost of private label credit. In the fourth quarter, we announced our decision to exit EXPO and related businesses. These actions will make the Company stronger. On the financial side, we ended the year with a solid operating profit and $41 billion in assets. We generated cash from the business of approximately $5.5 billion, which allowed us to invest in the business where necessary and reduce our debt obligations while maintaining a healthy dividend. On the operational side, we implemented an “Aprons on the Floor” initiative, which deployed over $200 million in annualized savings onto the floor of the stores for customer service...
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...Name Personal & Organizational Ethics Instructor Date Case Study Abstract: A Not-for-profit organization has similar issues like a for-profit organization. This case study examines Community Development International, a Not-for-Profit organization, and The Home Depot, a For-Profit organization. It examines both organizations from the beginning to now. It states the mission statements of each organization and describes the work each has done or is doing. It examines the ethical values of each organizations and the issues each has gone through or is going through with solutions as to how to fix each issue. Introduction: When analyzing an organization one should know what type of organization it is. There are two types of organizations, Not-for-Profit (Non-Profit) and For-Profit. According to The Macquarie Dictionary, a Not-for-Profit organization is “formed for the purpose of providing goods or services, but not for the purpose of making profit.” A For-Profit is described as “often plural pecuniary gain resulting from the employment of capital in any transaction”. (The Macquarie Dictionary, Profit, para.1). Community Development International, a Not-for-Profit organization, and Home Depot, a For-Profit organizations, are two different kinds of organizations, yet have similarities when it comes to ethical perspectives. Three ethical perspectives that were utilized to generate this study are Consequentialism, Deontology and Virtue Theory. Each organization...
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