51711890-Assign-1-6-3-Equity-Analyst-Project-MBA737-F3WW-Professor-Cable-Team-2

51711890-Assign-1-6-3-Equity-Analyst-Project-MBA737-F3WW-Professor-Cable-Team-2

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Assignment 1-6-3 Equity Analyst Project Team Analysis of Companies within an Industry Group Home Improvement Stores MBA 737-F3WW BY Daniel H. Lavely Manuel Lopez Kimberly Salva Jill Shin Tamia Stewart For Franklin University Professor J. Cable March 26, 2011
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1-6-3 Equity Analyst Project Introduction The home improvement industry dates back as far as the 1920s when several small family-owned businesses began, as well as one of the nation’s best known home improvement locations today - Ace Hardware. Since those early days several other companies have joined the ranks of well-known home improvement locations. These include, but are not limited to, True- Value, Lowe’s, Menard’s, Lumber Liquidators, and Home Depot. This portion of the equity analyst project requires Team 2 to determine which public firm classified within the industry should be selected as the most promising investment. Due to the fact that several of the companies within the home improvement industry are not publicly traded, Team 2 has decided to evaluate the following three companies: Home Depot, Lowe’s and Lumber Liquidators. Based on the results of the financial statement analysis and stock valuation for each of the three companies, a decision as to which company would be the best investment will be made. Home Depot Company Background The Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank (Home Depot, 2011), and has become one of the world’s largest home improvement store chains. The Home Depot has 1,972 convenient locations throughout the United States (including the territories of Puerto Rico and the Virgin Islands), Canada, China and Mexico. Stores average 105,000 square feet with approximately 23,000 additional square feet of outside garden area. When you consider that Home Depot’s competitors (such as Lowe’s) have been around for much longer periods of time, the fact that Home Depot has been able to grow so successfully is no small feat. The first two Home Depot stores were opened in August of 1979 in Atlanta, Georgia. 1
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1-6-3 Equity Analyst Project In 1981, the company went public on NASDAQ and moved to the New York Stock Exchange in 1984. The 1980s and 1990s spawned tremendous growth for the company, with 1989 marking the celebration of its 100th store opening. The company arrived in Canada with the acquisition of Aikenhead’s Home Improvement Centers in 1994, and it began flying its flag proudly in Mexico in 2001 with the acquisition of Total HOME. In 2006, the company extended its reach to China by acquiring The Home Way, a 12-store chain. Financial Statement Analysis In order to make an educated choice as to whether Home Depot is a viable organization to invest in for future growth and returns, an analysis of the financial statements must occur. The following measures will be evaluated to determine if Home Depot will be recommended: current ratio, total debt ratio, inventory turnover (including day’s sales in inventory) receivables turnover, total asset turnover, profit margin and return on equity. By determining these measures,
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This note was uploaded on 09/11/2011 for the course ECON 300 taught by Professor Grifith during the Summer '10 term at CSU Long Beach.

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51711890-Assign-1-6-3-Equity-Analyst-Project-MBA737-F3WW-Professor-Cable-Team-2

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