ACC 497 Home Depot Analysis II Week 3 Financial Statements Paper II

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HomeDepot Analysis II1Week 3 Financial Statements Paper IIEric DucoteACC497September 22, 2014Rick KwanIn your analysis of Home Depot's financial performance during the 2008 economic downturn,you used vertical analysis, ratio analysis, and trend analysis toevaluate the company’sperformance and management decisions. Given that Home Depot faced significant challengesdue to the recession, how well did the company's management team adapt to the situation?Specifically, how did their financial strategies, suchas debt reduction, store closures, and capitalinvestments, align with their long-term goals and mission statement? Please support yourresponse with evidence from the financial statements and management’s discussion in the 2008annual report.Word Count Requirement:500-700 words

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HomeDepot Analysis II2Home Depot Analysis IIHome Depot is amajor nationalretailchainthat operates in the home improvementindustry. The company sells building materials and home improvement products.The secondpartof the Financial Statements paper willlook atthe financial statements of Home Depot toascertain how effective the company’s management is in achieving its goals and missionstatement to the stakeholders. The analysis willinclude theuseofvertical analysis, trendanalysis, and ratio analysis to achieve to support the findings.A vertical analysis is a report that reports each amount on a financial statement as apercentage of another item. In performing the vertical analysis we need to look at the economicconditions of 2008. Mortgages started failing in the early months of 2008. Severalguaranteesofmortgage loans were placed under governmental conservatorship including Fannie Mae andFreddie Mac, which resulted in the U.S. Treasury Department supplying funds to help stabilizethese companies, raising the national debt ceilingin the process(Stock Market Crash of 2008).As a retailcompanyin thehome improvement and home building materialsindustry,Home Depot was hit hard by the economiccondition resulting in the company’s retail salesdeclining by 7.8 percent and its adjusted earnings per share declining by 22 percent in 2008.In the 2008 Home Depot Annual report, the company Chairman and the Chief ExecutiveOfficer, Francis S. Blake, advised that he viewed this year as not being a very ordinary year, withverypoorresults. The Management’s Discussion and Analysis of Financial Condition andResults of Operations sections of the report reported the necessity of closing additional 14underperforming stores and the removal of approximately 15 stores from the company’snewstore opening pipeline, the continued focus on the company’score retail business sustained with

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