Home Depot Fiscal Year 2004

Contents

TOC o “1-3” h z u Main Sections of the Annual Report PAGEREF _Toc377248279 h 1Factors influencing Home Depot’s Performance PAGEREF _Toc377248280 h 1Company’s Assets PAGEREF _Toc377248281 h 2Home Depot Internal Control Environment PAGEREF _Toc377248282 h 2

Main Sections of the Annual ReportHome Depot founding was in the year 1978. During its lifetime the company has been experiencing robust growth leading to its current status. That is, it is at the moment the second largest retailing company in United States of America and third wide world. In its 2004 annual report, the company detailed a number of issues in its reporting. Among the major details contained in the annual report is the growth of the company during the preceding one year. Hence, it sought to bring the attention of its stakeholders to the fact that the retailing outlet has been performing better in comparison to its competitors (Norton, 2006). Furthermore, it goes a step further to explain the reasons that did contribute to this growth. In addition to this and in order to give stakeholders a glimpse of the future the company, there are plans of expansion contained in the annual report of the year 2004.

Factors influencing Home Depot’s PerformanceThe reports attribute growth of net sales to the increase in revenues from services. That is, revenues from the service sector increased by around 40% totaling to $2.8 billion. This was due to strength in a number of areas directly linked to service delivery. The company also did experience increased profits and according to this report, it was due to the altering customer earnings for each share at $1.88 and $2.26 for the fiscal year in question. Furthermore, there was an increase in capital expenditures in the year (Porter, 2007). This is since in the previous fiscal year capital expenditures were at $3.9billion, which increased to $3.5 in a span of one year. This was due to the fact that investment in terms of increasing the number of stores, distribution centers, and the modernization of the stores there was an improvement.

Company’s AssetsGenerally, most of the company’s assets are increasing due to increased investments. One of the reasons as to why there was this increase is due to improvement in excess cost over the overall assets due to acquiring of companies by Home depot. Furthermore, the company is keen on increasing its long term assets by more than $70 million. Owing to all this, the current fiscal year has more assets in comparison to the preceding years. Hence, return on assets did increase considerably to around 14% (Porter, 2007). This has the meaning that of the total income of the company 14% came from assets. The reason for the said return over the assets is due to the newly acquired stores that are totaling around 140 newer stores. Hence, currently the company’s assets are on the rise and the top management intends to keep it that way according to the report.

Home Depot Internal Control EnvironmentThe company has commitment to ensure that there is effective internal control. As such, KPMG LLP which is an independent accounting company has the mandate of auditing all the financial systems of the company using their legal integrated legal framework. Furthermore, the company does its audit in accordance to the matters of ing (Norton, 2006). Additionally, to make internal control more effective, there is a meeting held in the United States of America before each of the company’s Company Accounting Oversight Board. According to the 2004 annual report, the management believes that it has enough reasons to state that its opinion on audits is reasonable. Hence, it allows KPMG which is independent to oversee most of the audits of the company at the moment.

References

Norton, C. L. (2006).Intermediate accounting: financial reporting and analysis. Stamford: Cengage Learning.

Porter, G. A. (2007). Financial accounting: the impact on decision makers. Stamford: Cengage Learning.