E11.10. Operating Profitability Analysis: Home Depot, Inc. (Medium) Comparative balance sheets and income statements for fiscal year ended 2005 are given below for the warehouse retailer Home Depot. Amounts are in millions, except per-share data.

a. Reformulate the 2005 and 2004 income statements and the 2005, 2004, and 2003 balance sheets. In addition to net income, Home Depot reported other comprehensive income of $137 million in currency translation gains in 2005 and $172 million of translation gains in 2004. Details of Home Depot's taxes are given in the tax footnote included in Exercise 9.10 in Chapter 9. For the reformulation of the balance sheets. include $50 million as operating cash.

b. Carry out a comprehensive analysis of operating profitability for 2005 and 2004. Real World Connection See Exercises E5.12, E9.10, E12.9, E14.13 and E14.14 and Minicase M4.1.

Current assets THE HOME DEPOT, INC, AND SUBSIDIARIES Consolidated Balance Sheets January 30, February 1, February 2, Assets 2005 2004 2003 2,188 1,072 8,338 254 11,917 5,560 9,197 4,074 872 724 20,733 3,565 107 575 244 8 530,011 Cash and cash equivalents Short-term investments Receivables, net Merchandise inventories $ 506 $ 1,103 1,559 1,749 1,499 1,097 10,076 9,076 Other current s 450 303 Total current assets 14,190 13.328 Property and equipment, at cost Land 6.932 6,397 Buildings 12,325 10,920 Furniture, fixtures, and equipment 6,195 5,163 Leasehold improvements 1,191 942 Construction in progress 1,404 820 Capital leases 390 352 28,437 24,594 Less accumulated depreciation and amortization 5,711 4,531 Net property and equipment 22,726 20,063 Notes receivable 369 84 Cast in excess of the fair value of net assets acquired, net of accumulated amortization 1,394 833 Other assets 228 129 Total assets 538,907 $34,437 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 5,766 $5,159 $ 4.560 Accrued salaries and related expenses 1,055 801 809 Sales taxes payable 412 419 307 Deferred revenue 1,546 1,281 998 income taxes payable 161 175 227 Current installments of long-term debt 11 509 7 Other accrued expenses 1,578 1,210 1,127 Total current abilities 10.529 9.554 8,035 Long-term debt, excluding current instalments 2,148 856 1,321 Other long-term labies 763 653 491 Deferred income taxes 1,309 967 362 Stockholders' Equity Common stock, per value $0.05; authorized: 10,000 shares; sued 2.385 shares at January 30, 2005, and 2,373 shares at February 1, 2004; outstanding 2,185 shares at January 30, 2005, and 2,257 shares at February 1, 2004 119 119 118 Paid-in cephal 6,650 6,184 5,858 Retained eamings 23,962 19,680 15,971 Accumulated other comprehensive income 227 90 (82) Unearned compensation (108) (76) (53) Treasury stock, at cost, 200 shares at January 30, 2005, and 116 shares at February 1, 2004 (5,692) (3,590 (2,000) Total stockholders equity 24.158 22,407 19,802 Total liabilities and stockholders' equity $38,907 $34,437 $30,011