Assume the role of a senior financial analyst who has been assigned to complete a thorough and detailed review for a company Home Depot. Access the company’s quarterly financial statements (10-Q) for the past two quarters

• In thorough and detailed review, analyze the company’s quarterly financial statements (10-Q) for the past two most current quarters and perform the following:
  
  • Prepare a comparative balance sheet and comparative income statement for the last two quarters and conduct a horizontal analysis of at least two items from the income statement and two items from the balance sheet. What conclusions or insights can you draw about the company’s performance from your analysis?
  • Prepare a common-size balance sheet and common-size income statement for the last two quarters and conduct a vertical analysis of at least two items from the income statement and two items from the balance sheet. What conclusions or insights can you draw about the company’s performance from your analysis?
  • Prepare a liquidity analysis by computing and using the appropriate ratios to assess liquidity.
    
    • Compute a minimum of three ratios and show your supporting calculations.
    • Analyze the ratios computed and discuss any insights or conclusions that can be drawn from your analysis.
  • Prepare a solvency analysis by computing and using the appropriate ratios to assess solvency.
    
    • Compute a minimum of three ratios and show your supporting calculations.
    • Analyze the ratios computed and discuss any insights or conclusions that can be drawn from your analysis.
  • Prepare a profitability analysis by computing and using the appropriate ratios to assess profitability.
    
    • Compute a minimum of three ratios and show your supporting calculations.
    • Analyze the ratios computed and discuss any insights or conclusions that can be drawn from your analysis.
• In addition, use the methods and tips provided in the textbook, Warren Buffet Accounting, to address the following questions:
  
  • What is your company’s primary revenue, secondary revenue, and gains?
  • What is your company’s primary expenses, secondary expenses, financial activity generated expenses, and losses?
  • What is the revenue trend? Does the 10-K or 10-Q discuss primary revenues and other revenue types?
  • What do the accounting policies say in the annual report (footnotes) regarding the cost of revenue? What are the drivers to the cost of revenue and the trends?
  • Are there any trends in sales and marketing expenses or research and development? Are these amounts reasonable for the type of business?
  • Compare general and administrative expenses to similar companies. Are they reasonable?
  • What is the ratio of net interest income (expense) to income from operations? Is this a safe ratio for the company? Why or why not?
  • What is the income taxes trend? Is the effective tax rate reasonable over time?

Formulate your analysis on the preceding requirements to discuss the financial health, performance, strengths, and weaknesses of the company, as well as any identified positive or negative trends.

Answer rating: 100% (QA)

Here is a stepbystep guide to conducting the analysis 1 Comparative Analysis Prepare Comparative Balance Sheet Income Statement Construct sidebyside c... View the full answer