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ACC 497 Home Depot Analysis

Financial analysis of Home Depot�s performance and strategy.

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    Running head: HOME DEPOT ANALYSIS 1 Home Depot Analysis Eric Ducote ACC 497 September 15, 2014 Rick Kwan Based on your analysis of Home Depot's financial performance during the economic downturn of 2008 - 2009, how effective were the company's strategic responses, including store closures, new store openings, and its focus on professional contractors? In your a nswer, analyze the impact of these decisions on the company's overall financial health, using vertical analysis and other financial metrics to support your points. Additionally, discuss any potential risks or concerns the company should consider as it cont inues to navigate the uncertain economic environment. Your answer should be approximately 800 - 1,000 words.

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    HOME DEPOT ANALYSIS 2 Home Depot Analysis Home Depot, founded by Bernie Marcus and Arthur Blank in Atlanta, Georgia, opened its doors in 1979 ("Home Depot", 2012). The company “ practically revolutionized the do - it - yourself home improvement industry in the United States almost overnight” ("Home Depot", 2012) . The company was built upon a “service first” attitude. It was the fastest growing home improvement store, averaging around 35,000 products by 1998. Today, Home Depot can boast the top spot in the home improvement industry domestically with a modest number of stores in foreign countries. Home Depot reflected healthy sales and operations , but in 2008 and 2009 with the downturn in the housing market, the company experienced a pr ofound effect on its profits. Because of the change in the economic climate, Home Depot has witnessed the slowing of sales for t he do - it - yourselfer as well as the p rofessional. To counter this effect, management set up a plan to offer delivery service to jobsites for professional contractors in hopes of attracting them to the store. Using t h is marketing tactic, Home De pot is hopeful that the professional contractor will buy products and continue buying as the market increases while the company gains an advantage over its competitors. Also during this economic crisis, the company opened 62 new stores, strategically placed in certain areas to capture the market, and closed 15 unproductive stores. This showed an affirmative stance in the future of the company. Still, to discover the economic health of the company, one must analyze their financials to determine the strength of the company. To analyze the financial stat ements of Home Depot, vertical analysis will show how to quantify the assessment made from the Financial Statements Paper Part I, comparing to the response made b y management on the financial condition of the company.

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