Office Depot Questions For Financial Managerial Accounting

All based on FY2009 (ending 01/31/2010)  Home Depot financial statements:

 

1.    
Is The Home Depot’s liquidity situation such that current liabilities can be easily paid? Why or why not?

 

2.    
Are the company’s receivables “turning over” at a rate that should be pleasing to management? Why or why not? What actions might management consider taking to speed up collections?

 

3.    
Is the company’s inventory turning over at a satisfactory rate? Why or why not? Does the company maintain an adequate level of inventory to meet customer demand? Might it be the case that the company maintains TOO HIGH a level of inventory? Why or why not?

 

4.    
Based on the composition of the company’s CURRENT assets, what problems is the company likely to encounter if its inventories turn over at a much slower than expected rate?

 

5.    
How has The Home Depot’s profitability changed over recent years? On what measures are you basing your response? If you were one of the company’s corporate managers, would you be satisfied with the trend in gross profit? The trend in operating income? Why or why not?

 

6.    
Are changes in the company’s operating cash flows consistent with changes in its operating income? Does The Home Depot appear to be experiencing any sort of a cash flow problem? Why or why not?

 

7.    
Does the company’s management appear to be managing debt properly? Is the company too reliant on long-term debt financing? Why or why not? What kinds of problems can this company (or any company) avoid by properly managing its debt?

 

8.    
Does the company appear to be investing appropriately in plant and equipment? (In other words, is there any indication that investments are too low/high?

 

9.    
Are the company’s dividend payouts at an appropriate level? Why or why not?

 

10. 
Is the company in a good position to obtain financing by issuing new shares of its stock? Why or why not?

 

11. 
Other than day-to-day operations, what are the primary uses of the company’s cash? Other than from day-to-day operations, what are the primary sources of the company’s cash?

 

12. 
What is your assessment of the company’s cash flow position over recent years?

 

13. 
Is this a good time for management to concentrate on new store construction? Why or why not?

 

   14. 
Does the report of the independent auditors offer the kind of opinion that should be pleasing to them?