Mini Case 1-FIN6806 - Advanced Financial Mgmt

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Valencia College *

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Apr 3, 2024

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Ronald Ruiz Martinez FIN 6806-113: Advanced Financial Mgmt March 23 rd , 2024 Mini Case 1 - Financial Statements #1.1-1.5 This paper presents a financial statement analysis project on Home Depot. Home Depot is a home improvement and the retail industry and has 2,300 stores across North America. “The home improvement industry has been increasing annually in most parts of the world. In the United States, the market value is forecast to exceed 600 billion dollars by 2025, which is more than double the value reached in 2008” (Statistica). When looking at the home improvement industry and the large controllers you think of Home Depot and Lowe’s. Home Depot has several competitors in the retail market: Lowe’s, Amazon, True Value, Ae Hardware and Builders First Source. In the 4 th Quarter of 2023 Home Depot had a market shared of 61% vs Lowes Companies Inc of 36%, the rest of the market is shared between competitors. Surges in demand can be credited to the current interest rates and economy which results in consumers tackling renovation projects. The home improvement activities that retailers have seen in the recent years is expected to slow but consumers are still expected to make improvements to their investments and continue to drive sales growth. Profit margin in the home improvement industry ranges from 31%-34%. While competitors in the industry offer similar products with comparable pricing, most competitors have produced their own products at lower cost to increase profit margin respectively. The home improvement market was valued at 340 billion dollars in 2022 and is projected to increase to as much as 490 billion dollars by 2030 (Howard). These numbers do include all of the home improvement markets which are renovation services, DIY products, Smart home

Ronald Ruiz Martinez FIN 6806-113: Advanced Financial Mgmt March 23 rd , 2024 solutions, landscaping and outdoor improvement, maintenance and repairs, etc. Market growth is expected on average, to be about 3.6% from 2025 through 2030. The professional renovation services sector is expected to grow by 5% in 2025, while the DIY market of home owners to take on Do-It-Yourself projects is projected to grow 4% from it’s 2.5% in 2022. #3.3 When making comparisons with Home Depot's previous financials over the 3 years reviewed above, the revenues based of the percentage of net income stayed relatively flat year over year. #5.1 The average current ratio for the home improvement industry is 1.77, based of the last 3 years current ratio for Home Depot they have been above industry standard. I believe this is due to the increased. The inventory turnover rate in the home improvement average ranges from: 4.0- 4.2; The Home Depot’s turn-over rate ranged from 4.3- 5.3 ratio. Home Depot’s Debt to Total Assets ranged in the 2.0 which is the average of the industry.

Ronald Ruiz Martinez FIN 6806-113: Advanced Financial Mgmt March 23 rd , 2024 Work Cited Dybek, Martin. “Home Depot Inc. (NYSE:HD): Income Statement.” Stock Analysis on Net, Stock Analysis on Net, 14 Mar. 2024, www.stock-analysis-on.net/NYSE/Company/Home- Depot-Inc/Financial-Statement/Income-Statement. “Home Depot Profit Margin 2010-2024: HD.” Macrotrends, www.macrotrends.net/stocks/charts/HD/home-depot/profit-margins. Accessed 16 Mar. 2024. “Home Improvement Industry Profitability .” Home Improvement Industry Profitability, Gross Margin, Net Margin, Cash Flow Margin, ROE, 13 Mar. 2024, csimarket Howard, Maria. “Global Home Improvement Market Analysis: Trends, Growth Drivers, and Competitive Landscape in the Evolving Residential Renovation and DIY Industry.” Home Improvement Market Size, Trends, Analysis Report, 2 Feb. 2024, www.linkedin.com/pulse/global-home-improvement-market-analysis-trends-growth-maria- howard-wvtwf/. “The Statistics Portal.” Statista , www.statista.com/markets/415/topic/462/home- improvement/#overview. Accessed 16 Mar. 2024. Team TBH. Top 10 Competitors of the Home Depot in 2024, thebrandhopper.com/2023/08/09/top-10-competitors-of-the-home-depot-in-2024/. Accessed 16 Mar. 2024.

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