ACCOUNTING FRAUDS EXAMINATION

Accounting Frauds

Table of Contents

About the company1

Market share2

Location2

Major competitors3

Financial Overview3

Over View of Balance Sheet Income Statement, and Cash flow Statement4

Expense distribution4

Assets and Capital Structure:5

Capital Structure6

Ratio Analysis7

Comments on Ratio Analysis12

Examination of Accounting14

Violation of Accounting Laws and related Laws15

Debt Indicator:15

Indicator of liquidity:18

Home Depot CEO18

10 years of compensation19

References20

Accounting Fraud Examination

About the company

Home Depot is an American Trade Network, the largest on the planet to sell tools for the repair and building materials. The company's headquarters is located in the Vinings (Ga.). The company employs three thousand fifty five people. Network operates 2.144 stores in the U.S., Canada, Mexico and China (Arthur 2001).

The Home Depot is the second largest retail retailer in the U.S. after Wal-Mart and the third in the world after Wal-Mart.

Home Depot offers a vast network to attract the best talent. The company uses the purchase and collection methods of the diversity and improves the application pool and the quality of hiring decisions. Recruitment strategy used in developing country and institutions, are potential sources of qualified workers partnerships. Committed to working with the Housing Department and the AARP found at the Bureau of Labor members of AARP and other opportunities to work who are important to look for work. In recruitment, hiring and retention methods seem to pay off, because Home Depot's retail business experience than most of the staff turnover, staff turnover is both costly and destructive of an organization and its customers, so they should hire the best people to provide them with growth opportunities within the organization (Cokins 2001).

Market share

Name

Market Share

Lowe's Companies, Inc.

25%

Menard, Inc.

15%

True Value Company

20%

home Depot

40%

 

Location

Home depot is the U.S based retail store, provides different services to facilitate the large number of the consumer by online shopping.

Major competitors

Lowe's Companies, Inc.

Menard, Inc.

True Value Company

home Depot

Financial Overview

Particulars

2008

2009

2010

Sales

5335396

5653083

5380550

Percent change in sales each year

0.06383

0.09890

0.13753

Net Income

15837.51

17358.0697

30570.73335

Percent change in net income each year

17.00%

17.00%

18.00%

Over View of Balance Sheet Income Statement, and Cash flow Statement

Expense distribution

Expenses

2010

General/Admin Selling/ Expenses

559,186.00

Research and Development

175571.6

Depreciation/Amortization

578700.36

Interest Expense - Net Operating

115811.5

extraordinary Expense (Income)

50876.555

Additional Operating Expenses

55550.751

Assets and Capital Structure:

Assets and Capital Structure

2010

Cash & Equivalents

2,080,709.00

Short Term Investments

2,529,309.00

Cash and Short Term Investments

3,520,028.00

Accounts Receivable - Trade, Net

2,559,252.00

Total Receivables, Net

5,892,257.00

Total Inventory

2,305,252.00

Prepaid Expenses

527,555.00

Other Current Assets, Total

605,885.00

The asset allocation graph shows that the cash and equivalent has the 11% of the total asset structure, and the biggest contribution played by the receivables.

Capital Structure

Capital Structure

2010

Accounts Payable

1,503,071.00

Accrued Expenses

1,773,133.00

Notes Payable/Short Term Debt

3,179,009.00

Current Port. of LT Debt/Capital Leases

1,771,817.00

Other Current liabilities, Total

1,561,849.00

Common Stock, Total

397,050.00

Additional Paid-In Capital

505,760.00

Capital structure is based on the different heads just like this it is based on the Accounts payables, Long terms loan, and some of the common stocks which collectively make the capital structure of the Home Depot.

Ratio Analysis

Years

2008

2009

2010

Current Ratio:

1.002

1.02

1.12

Years

2008

2009

2010

Quick Ratio:

0.49

0.505

0.6

Years

2008

2009

2010

Total Asset Turnover:

2.85

2.91

3.2

Years

2008

2009

2010

Average Collection Period:

75

85

68

Years

2008

2009

2010

Total Debt to Total Assets:

1.48

1.5

1.9

Years

2008

2009

2010

Times Interest Earned:

2.9

2.5

3.5

Years

2008

2009

2010

Net profit Margin:

1.9

1.6

2.6

Years

2008

2009

2010

Return on Assets:

1.95

1.8

2.6

Years

2008

2009

2010

Return on Equity:

1.96

1.7

2.9

Years

2008

2009

2010

PE Ratio:

2.6

2.5

2.9

Years

2008

2009

2010

Market to Book Ratio:

2.55

2.6

2.4

Comments on Ratio Analysis

Liquidity ratios enable the organizational management to analyze their position to meet the day-to-day requirements of the organization and to pay off its short-term debts. They are working capital, current and quick ratio (David 2005).

The Return on Assets (ROA) is about ...