Home Depot Valuation

Assess Home Depot’s financial effect from 1986 to 1999 and explain the decline in performance in 2000: 1) break away to Exhibit 4, Home Depot reached $1 one thousand million in gross gross gross revenue in 1986, and reached $38 billion in 1999. The medium join on in unscathed footage was 26% from 1986 to 2000 while the gross sales developing rate dropped a lot in 2000. on that point was also a drop in sales per square footage from $423 in 1999 to $415 in 2000 and a drop in each week sales per store from $876,000 in 1999 to $826,000 in 2000. The average sales growth rate was 31% from 1986 to 1999. However, the growth rate dropped to 19%. The declining performance in 2000 from much smaller attach in sales was caused by Home Depot’s vulturous expansion efforts and market saturation, and magnified by a retardent economy. amidst June 1999 and May 2000, the Federal Reserve had raised engross grade six times to slow the economy.

2) The average hard roe was 25.2% from 1986 to 1999, but dropped to 20.9% in 2000. Given the similar operating ROA (19.6% for 1986 to 1999, and 19.8% for 2000) for the straddle periods, the decreased ROE in 2000 was attributable to a spacious decrease in financial leverage gain. Despite of a higher spread in 2000 comparing to the period from 1986 to 1999, the ignore financial leverage was pretty low, which is caused by the large increase in the stockholder’s equity.If you want to get a full essay, order it on our website: OrderCustomPaper.com

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