Applications of Business Analysis Model FIRM

Abstract

This chapter provides step-by-step instructions for applying the business model FIRM to Home Depot Company using time series of sales, total costs, and total assets for this company. The chapter covers the data used; estimated equations for sales, assets, and profit rate; and forecasts of fundamental business variables, including sales, total costs, total assets, total profits, profit rate, and profit margin. The estimated models are also used for simulations of cost reduction, sales projections, and investment evaluation. Following these steps, managers can readily apply FIRM to their own firm.