Expenses are related to costs of goods sold and 37

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expenses are related to costs of goods sold and 37% tied to Selling, General and Administrative (S,G&A) expenses, which is a major non-production cost. The distribution is plausible, but the amounts could be reduced with significant checks and balance review. This would in turn close the gap between sales and income. c. Assets Distribution : Year-end FY 2016 (millions) Cash $2,216 Accounts receivable $1,890 Inventory $11,809 Other Assets $608 PIE CHART OF ASSETS, Year-end FY 2016 13% 11% 71% 4% 2016- Home Depot Asset Distribution Cash Accounts Receivable Inventory Other Assets
ASSETS DISTRIBUTION COMMENTS: Due to Joe’s business model of distributing oil they maintain a higher level of inventory (43%) on hand. Equipment (38%) used to transport and deliver the inventory makes up the second highest asset for the company. However, Joe’s cash and accounts receivable (19%) is significantly less than their equipment and overhead, which means the company is assuming mid-level risk by putting pressure on the company to maintain and grow new accounts to cycle the inventory. c. Capital Structure : Year-End FY 2016 (millions) Capital Structure: Current Liabilities $12,524 Long-term & Other Liabilities $1965 Common Equity Total $6316 CAPITAL STRUCTURE PIE CHART, Year-end FY 2016 67% 8% 25% 2016- Home Depot Capital Structure Current Liabilities$12,254 Long-Term Debt Common Equity Total
CAPITAL STRUCTURE COMMENTS: Capital structure is the amount of debt versus equity financing held on a balance sheet. A healthy capital structure that reflects a low level of debt, which Joe’s has, and a corresponding high level of equity is a very positive sign. A company's reasonable, proportional use of debt and equity to support its assets is a key indicator of a strong balance sheet. However, Joe’s retained earnings is proportional lower than their accounts payable. The balance in retained earnings means that the company has been profitable over the years and its dividends to stockholders have been less than its profits. It is possible that a company with thousands of dollars of retained earnings has very little cash available.

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