Home Depot Analysis

Home Depot

Considering I have worked for Home Depot for a brief period of time, I decided to analyze and compare its 10K and Annual Report. As a public company, Home Depot is mandated by the U.S. Securities and Exchange Commission (SEC) to file a 10K report annually that gives a comprehensive summary of the company's performance. In addition to the 10K, most companies are required to prepare and disclose annual reports for the primary purpose of informing shareholders and potential investors of the company's financial performance and activities. When analyzing Home Depot's 10K and annual report, I focused on comparing the different visual strategies, intention of each report, success in targeting their audiences and effectiveness of each report.

The visual and verbal strategies of each report differed tremendously. The 10K is about as bland as it gets. The report's purpose is simply to comply with the SEC; therefore, the company, Home Depot, does not concern itself with any visual effects. The entire report is submitted on white paper with black font. The verbal aspect of the report is just as unappealing as the visual aspect. The report is extremely wordy and hard to understand for an individual without knowledge of financial terminology. Words and statements such as, "Registrants proxy statement" and "Rationalization charges" make the document fairly incomprehensible. Luckily, its audience consists of financial savvy people who have the knowledge and background to understand the material. The annual report is quite the opposite. Colorful pictures and graphics fill the report to persuade shareholders and potential investors that Home Depot is the best spot for their money. The annual report also contains a very easy to understand, friendly letter from the CEO, Frank C. Blake, to inform individuals in comprehensible terms the year-end financial status and activities Home Depot has undergone and is planning to undergo. To quote, the CEO ends his letter with, "I hope as you spend time in our stores you will notice our continuing improvement." Hopefully his intentions are met by this quote

Both the annual report and 10K have clearly defined intentions. As mentioned previously, the 10K's primary purpose is to comply with and satisfy all the requirements set in stone by the Securities and Exchange Act of 1934. The report is developed solely for this reason. The SEC's mission is essentially to protect investors and regulate the company's legality. The results Home Depot is trying to achieve by creating a 10K are to prove to the SEC that they have fulfilled their legal duties as a company and have not deceived anyone of their business operations. The annual report has a very different intention. It is developed and distributed to convince current shareholders that their money is in the right place and persuade potential shareholders that Home Depot is the right place for their money. The report states, "Your company is financially strong," creating the vision that the shareholders are part of the company and should continue to be involved because of its financial stability. The sought after result of the annual report is to retain current investors and develop new investors. If these results are obtained, the reports must have successfully targeted their audiences.

Although each report has essentially the same information, the target audiences are very different. The 10K's audience is primarily the SEC, which consists of five presidentially-appointed Commissioners and approximately 3,500 staff members. These individuals have very educated backgrounds in areas including finance, investment management and risk management. Home Depot's 10K successfully targets its audience by providing information in a very descriptive manner so that the audience has all it needs to evaluate the company. The annual report's target