Brief Description Home Depot is one of the prominent and successful retailing companies in the United States. In particular, the company deals with the provision of home improvement supplies including tools, construction merchandises, kitchen appliances and the like. One of the key elements impelling Home Depot’s success is its financial strategy. The main financial strategy of the company is cost minimization. On the basis of the cost leadership generic strategy, the company’s financial goal is cost minimization. Moreover, the strategic goal and objective of Home Depot encompassing the development of close and special affiliations with suppliers aid the firm in accomplishing cost minimization (Smithson, 2017).

Total Assets, Total Liabilities and Total Stockholders’ Equity Comparison

In accordance to the balance sheets for the two financial years, the total assets of the company decreased from $41,164 to $40,877 whereas the total liabilities also declined from $23,387 to $21,484. I believe that the change of each category is larger because it is linked to a significant decline in the net property and equipment amount. In comparison to other companies within the industry, Home Depot’s financial performance is poorer.

Income Statement Comparison

Compare the following income statement accounts between 2009 and 2008. How does a change for each account impact net income?

1. Net sales

A change in the net sales of the company without doubt influences the generated net income. An increase in the net sales implies that the net income will increase whereas a decline in the net sales implies that the net income will also decline. For instance, in the case of Home Depot, the net sales decreased from $77,349 to $71,288, which caused a decline in the net income from $4,395 to $2,260.

2. Cost of goods...

On the other hand, an increase in the cost of goods sold causes a decline in the gross profit and therefore a decline in the net income. For instance, in the case of Home Depot, the cost of goods sold declined from $51,352 in 2008 to $47,298 in 2009 and this is reflected in decline in the net income from $4,395 to $2,260.
3. Gross profit

The gross profit is the level of returns generated by a company prior to expenses and taxes deducted. The inference of this is that an increase in the gross profit causes an increase in the net profit whereas a decline in the gross profit causes a decline in the net income. The can be perceived in Home Depot’s financial statements with the amount declining from $25,997 in 2008 to $23,990 in 2009 and therefore causing decline in the net income from $4,395 to $2,260.

4. Interest expense

An organization’s interest expense depicts the interest that is payable on any borrowings including loans, bonds or credit granted. Being a non-operating expense item in the income statement, it implies that an increase causes a decrease in the net income whereas a decline causes an increase in the net income.

Balance Sheet Comparison

Compare the following balance sheet accounts for two years, and briefly describe how the change of each account impacts assets, liabilities, and stockholders’ equity. Do you think such changes would have positive or negative impact to business? Why?

1. Cash and cash equivalent

A change in cash and cash equivalent causes an impact on assets. An increase in cash and cash equivalent leads to an increase in current assets whereas a decline causes a decrease in current assets and therefore a decrease in…