ACC 497 Home Depot Analysis

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Running head: HOME DEPOT ANALYSIS1Home Depot AnalysisEric DucoteACC 497September 15, 2014Rick KwanBased on your analysis of Home Depot's financial performance during the economic downturn of2008-2009, how effective were the company's strategic responses, including store closures, newstore openings, and its focus on professional contractors? In your answer, analyze the impact ofthese decisions on the company's overall financial health, using vertical analysis and otherfinancial metrics to support your points. Additionally, discuss any potential risks or concerns thecompany should consider as it continues to navigate the uncertain economic environment. Youranswer should be approximately 800-1,000 words.

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HOME DEPOT ANALYSIS2Home Depot AnalysisHome Depot, founded by Bernie Marcus and Arthur Blank in Atlanta, Georgia, openedits doors in 1979("Home Depot",2012).The company“practically revolutionized the do-it-yourself home improvement industry in the United States almost overnight”("HomeDepot",2012).The company was builtupon a “service first” attitude. It was the fastest growinghome improvement store, averaging around 35,000 products by 1998. Today, Home Depot canboast the top spot in the home improvement industry domestically witha modest number ofstores in foreign countries.Home Depot reflected healthy sales and operations,but in 2008 and 2009 withthedownturn in the housing market, the company experienced a profound effect on its profits.Because of the change in the economic climate, Home Depot has witnessed the slowing of salesfor the do-it-yourselfer as well as the professional. To counter this effect, management set up aplan to offer delivery service to jobsites for professional contractors in hopes ofattracting themto the store. Using this marketing tactic, Home Depot is hopefulthat the professional contractorwill buy products and continue buying as the market increases whilethe company gains anadvantage over its competitors. Also during this economic crisis, the company opened 62 newstores, strategically placedin certain areas to capture the market, and closed 15 unproductivestores. This showed an affirmative stance in the future of the company. Still, to discover theeconomic health of the company, one must analyze their financials to determine the strengthofthe company.To analyze the financial statements of Home Depot,verticalanalysiswill show how toquantify the assessment made from the Financial Statements Paper Part I, comparing to theresponse madeby management on the financial condition of the company.

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