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Home Depot Ratios

For Home Depot: Analyze these ratios versus industry:

Profit as percent of sales
Current ratio
Debt to equity ratio
Return on Equity (ROE)

Discuss how these ratios depict the financial health of this company as compared to the industry average and what the company might do to get better in each area.

Solution Preview

I selected Home Depot. Here are the ratios compared to industry from
See attached.

Profit ratios show that Home Depot is doing better than the industry with gross margin of 34.62 versus industry of 24.44. The gross margin is slightly higher but the net profit margin is clearly above the industry with Home Depot generating a 6.21% versus the industry of 4.98%. This hold for the past five years where Home Depot has a 4.7% net profit margin and the industry has a 4.26% net profit margin. This is an impressive track record over a recession period.

The current ratio for Home Depot and for the industry are comparable. This is typical, showing that major firms typically have the discipline and experience to make sure their current assets exceed their ...

Solution Summary

Your tutorial is 516 words plus four charts from MSN showing the ratios compared to industry. See attached for charts.