Ratio Analysis

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Ratio Analysis

OBJECTIVE: You are to assume you have been recently hired by The Company and have been assigned to a team that reports to the CEO of HOME DEPOT. The head of your team is the CFO who is concerned about HOME DEPOT’s current financial performance and comparison against major competitors in the industry and the impact that may have on the firm’s stock price. The CFO would like your team to provide insights that will help them to project future financial performance. Specifically, the primary question to answer is: will HOME DEPOT be financially viable over the next two to three years, and which steps should be done to improve its financial stability?

SUGGESTED WEBSITES

· www.morningstar.com – To find the information for your company you need to type the stock symbol in the Quotes window to get into the company’s page.

· www.marketwatch.com  -To find the information for your company you need to type the stock symbol in the Search window to get into the company’s page.

· www.Finviz.com – To find the information for your company you need click on Screener on the top of the screen, type the stock symbol in the Ticker window to get into the company’s page., and click on the company in the list.

· www.money.cnn.com  -To find the information for your company you need to type the stock symbol in the Search window to get into the company’s page.

· www.finance.yahoo.com – To find the information for your company you need to type the stock symbol in the Search window to get into the company’s page.

· www.nyse.com – Click on Data, then click on Stocks (under Quotes), and type the name of the company or the stock symbol in the window “Keyword or symbol” to get into the company’s page.

· www.nasdaq.com – To find the information for your company you need to type the stock symbol in the Search window to get into the company’s page.

· Company’s websites

YOUR SPECIFIC ASSIGNMENT

Using the information from the websites the students will develop evaluation of the financial performance for HOME DEPOT. (The evaluation portion will total 85% of the assignment grade)  

-1—Background and Industry (one short paragraph). (DON’T WORRY about #1)

-2— Common size analysis (15% of the project grade). You can find the common size financial statements for the company for the last 3-5 years on www.morningstar.com. Type the stock symbol in the Quotes window to get into the company’s page. Scroll down and click on All Financial Data. Switch View from “$” to “%”.

Create a table that contains the most significant common size financial performance results for the last 3-5 years for THE COMPANY and for the last year for the major competitor. Present the table with this information in your report.

Write about 2-2.5 pages of the analysis of the financial conditions, its stability, and trends.

 –6- Develop a specific recommendation, with supporting rationale, as to whether the assigned company’s recent trends and results in financial performance is of sufficient financial strength, will THE COMPANY be financially sustainable over the next two to three years, and which steps should be done to improve its financial stability? (about 1 page) (15% of the project grade).