Attached are these Excel workbook/ financial statements. Ratio's and analysis needs to be completed. Please see attachments for more details. I would the answers by Friday.

This is for managerial accounting.

ACT 5140 - Accounting for Decision Makers HW #1 - Appendix A Directions: Answer all the questions. Please submit your work in Word or PDF formats only. You can submit an Excel file to support calculations, but please \"cut and paste\" your solutions into the Word or PDF file. Be sure to show how you did your calculations. Also, please be sure to include your name at the top of the first page of your file. The assignment is due by 11:59 PM Eastern on August 27. Please run spell check and proofread your answers. Question #1 Using the accompanying financial statements (Excel Workbook), assess The Home Depot concerning liquidity, solvency, profitability, and stock performance. For each area, you should calculate the ratios we discussed in class and provide a brief analysis of the ratios calculated. You do not need to perform vertical analysis for this assignment. I include historical stock price information and outstanding common share information below. You do not need to look beyond the financial statements to complete this assignment. Fiscal Year Ended 1/29/2017 1/31/2016 Adjusted Closing Price $136.70 $121.69 Common Shares Outstanding (millions) 1,203 1,252 2/1/2015 $99.05 2/2/2014 $71.36 1,307 1,380 HOME DEPOT INC $ in millions Year Ending NET SALES Cost of sales GROSS PROFIT Operating Expenses: Selling, General and Administrative Depreciation and Amortization Total Operating Expenses OPERATING INCOME 1/29/2017 $94,595 62,282 32,313 1/31/2016 $88,519 58,254 30,265 2/1/2015 $83,176 54,787 28,389 2/2/2014 $78,812 51,897 26,915 17,132 1,754 18,886 13,427 16,801 1,690 18,491 11,774 16,280 1,640 17,920 10,469 16,122 1,627 17,749 9,166 936 12,491 4,534 $7,957 753 11,021 4,012 $7,009 493 9,976 3,631 $6,345 699 8,467 3,082 $5,385 Basic earnings per share Diluted earnings per share $6.47 $6.45 $5.49 $5.46 $4.74 $4.71 $3.78 $3.76 Dividends per share $2.76 $2.36 $1.88 $1.56 Interest and Other, net Earnings before income taxes Provision for Income Taxes NET EARNINGS HOME DEPOT INC $ in millions As of 1/29/2017 1/31/2016 2/1/2015 2/2/2014 ASSETS Current assets: Cash and cash equivalents Accounts receivable, net Merechandise inventories Other current assets $2,538 2,029 12,549 608 $2,216 1,890 11,809 569 $1,723 1,484 11,079 1,016 $1,929 1,448 11,439 795 Total Current Assets 17,724 16,484 15,302 15,611 Property & Equipment, at cost Less Accumulated Depreciation and Amortization Net Property & Equipment 40,426 18,512 21,914 39,266 17,075 22,191 38,513 15,793 22,720 39,064 15,716 23,348 Goodwill Other assets TOTAL ASSETS 2,093 1,235 $42,966 2,102 1,196 $41,973 1,353 571 $39,946 1,289 602 $40,850 LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities: Short-term debt Accounts payable Accrued salaries & related expenses Sales taxes payable Deferred revenue Income taxes payable Current installments of long-term debt Other accrued expenses $710 7,000 1,484 508 1,669 25 542 2,195 $350 6,565 1,515 476 1,566 34 77 1,941 $290 5,807 1,391 434 1,468 35 38 1,806 $0 6,071 1,428 396 1,337 12 33 1,646 Total current liabilities 14,133 12,524 11,269 10,923 Long-term debt, excluding current installments Other long-term liabilities 22,349 1,855 20,789 1,965 16,869 1,844 14,691 2,200 Deferred income taxes Total liabilities 296 38,633 379 35,657 642 30,624 514 28,328 Shareholders equity: Common stock Paid-in capital Retained earnings Accumulated other comprehensive income (loss) Treasury stock, at cost Total shareholders equity 88 9,787 35,519 (867) (40,194) 4,333 88 9,347 30,973 (898) (33,194) 6,316 88 8,885 26,995 (452) (26,194) 9,322 88 8,402 23,180 46 (19,194) 12,522 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $42,966 $41,973 $39,946 $40,850 HOME DEPOT INC $ in millions Year Ending OPERATING ACTIVITIES: Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization Stock-based compensation expense Gain on sales of investments Changes in Assets and Liabilities, net of the effects of acquisition and disposition Receivables, net Merchandise inventories Other current assets Accounts payable and accrued expenses Deferred revenue Income taxes payable Deferred income taxes Other Net cash provided by operating activities INVESTING ACTIVITIES: Capital expenditures Proceeds from sales of investments Payments for business acquired Proceeds from sales of property & equipment Net cash used by investing activities FINANCING ACTIVITIES: Proceeds from short-term borrowings, net Proceeds from long-term borrowings, net of discount Repayments of long-term debt Repurchases of common stock Proceeds from sales of common stock Cash dividends paid to stockholders Other financing activities 1/29/2017 1/31/2016 2/1/2015 2/2/2014 $7,957 $7,009 $6,345 $5,385 1,973 267 0 1,990 244 (144) 1,940 225 (323) 1,927 228 0 (138) (769) (48) 446 99 109 (117) 4 (181) (673) (5) 888 109 154 15 (33) (81) (278) (199) 244 146 168 159 (104) (15) (625) (5) 605 75 119 (31) (35) $9,783 $9,373 $8,242 $7,628 (1,621) 0 0 38 (1,503) 144 (1,666) 43 (1,442) 323 (200) 48 (1,389) 0 (206) 88 ($1,583) ($2,982) ($1,271) ($1,507) 360 4,959 (3,045) (6,880) 218 (3,404) (78) 60 3,991 (39) (7,000) 228 (3,031) 4 290 1,981 (39) (7,000) 252 (2,530) (25) 0 5,222 (1,289) (8,546) 241 (2,243) (37) Net cash used by financing activities ($7,870) ($5,787) ($7,071) ($6,652) $330 (8) $604 (111) ($100) (106) ($531) (34) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 2,216 $2,538 1,723 $2,216 1,929 $1,723 2,494 $1,929 SUPPLEMENTAL DISCLOSURE OF CASH PAYMENTS MADE FOR Interest, net of capitalized interest Income taxes $924 $4,623 $874 $3,853 $782 $3,435 $639 $2,839 Change in Cash and Cash Equivalents Effect of exchange rate changes on cash and cash equivalents ACT 5140 - Accounting for Decision Makers HW #1 - Appendix A Liquidity Ratios Fiscal Year Ended Current ratio Working capital Acid-test ratio Inventory turnover (times) Days sales in inventory Accounts receivable turnover (times) Days sales in receivables Free cash flow Average inventory Average A/R 2/1/15 1.36 $4,033 0.28 4.90 74.51 57.72 6.32 $6,800 2/2/14 1.42 $4,530 0.31 4.72 77.25 56.44 6.47 $6,239 2/3/13 1.34 $3,910 0.34 4.65 78.49 56.63 6.45 $5,663 $11,068.0 $1,441.0 $10,883.5 $1,396.5 $10,517.5 $1,320.0 1/29/12 1.55 $5,144 0.34 $5,430 Liquidity Analysis: Home Depot has excellent liquidityevery year, its current ratio is greater than 1.0. Over the course of the four years, there was a decrease in both the current ratio (1.55 in 2012 to 1.36 in 2015) and working capital ($5,144 in 2012 to $4,033 in 2015) overall, due to current liabilities increasing at a faster rate than current assets. However, sales have increased and inventory levels have remained fairly stable, which signifies good inventory management by Home Depot. Home Depot's acid-test ratio decreased over the time period (0.34 in 2012 to 0.28 in 2015). Usually, this would indicate that the company does not have the liquid assets to pay their current liabilities and should be treated with caution. The acid-test ratio (0.28 in 2015) is also lower than the current ratio (1.36 in 2015), which again would normally indicate the company's assets are highly dependent on inventory. In Home Depot's case, this is not a bad sign. Retail stores have low acid-test ratios and other factors are taken into account when determining whether the company is in danger or not. One of these determining factors would be \"days sales in inventory.\" Over the time period, there was a reduction in days sales in inventory (78.49 in 2013 to 74.51 in 2015). Solvency Fiscal Year Ended Debt to equity Interest coverage 2/1/15 2.08 12.61 2/2/14 1.38 12.89 2/3/13 0.67 12.29 1/29/12 0.74 10.99 Long term liabilities $19,355 $17,247 $11,845 $13,244 Solvency Analysis Home Depot's solvency is also relatively strong. Although there was an increase in its long-term liabilities ($13,244 in 2012 to $19,355 in 2015) and its debt-to-equity (0.74 in 2012 to 2.08 in 2015) over the past four years, interest cost coverage numbers have remained high and increasing over the time period. This indicates Home Depot has had no difficulties making interest payments. The decrease in equity caused the large increase in debt-to-equity. This decrease in equity results from stock buybacks, not net losses, so this is not an area of concern. Profitability Fiscal Year Ended Asset turnover Return on sales Gross margin % Return on assets Return on equity Average interest rate Average total assets Income tax rate Net of tax interest expense Adjusted net income Average equity Average total liabilities 2/1/15 $2.07 8.26% 34.81% 17.08% 58.09% 2.83% 2/2/14 $1.93 7.41% 34.75% 14.31% 35.55% 2.77% 2/3/13 $1.83 6.60% 34.57% 12.09% 25.42% 2.75% $40,232.0 36.40% $527.90 $6,872.9 $10,922.0 $29,310.0 $40,801.0 36.40% $452.19 $5,837.2 $15,149.5 $25,651.5 $40,801.0 37.20% $396.91 $4,931.9 $17,837.5 $22,963.5 1/29/12 6.07% 34.47% 36.01% $387.79 $4,270.8 Profitability Analysis Home Depot showed an improvement in asset turnover$1.83 in 2013 to $2.07 in 2015which is good in terms of the company's profitability. The increase in return on sales (6.07% in 2012 to 8.26% in 2015) indicates that Home Depot's income is increasing faster than their sales, which is another positive. There was also a significant improvement on return on assets (12.09% to 17.08%) and return on equity (25.42% to 58.09%). The return on assets was also higher than the average interest rate paid on liabilities. Both of these increases indicate that Home Depot has positive financial leverage through its use of liabilities. Stock Performance Fiscal Year Ended Book value per common share Earnings per share (basic) Earnings per share (diluted) P/E Ratio Dividend yield Dividend payout 2/1/15 $7.13 $4.74 $4.71 21.94 1.82% 39.92% 2/2/14 $9.07 $3.78 $3.76 19.80 2.10% 41.49% 2/3/13 $11.96 $3.03 $3.00 21.29 1.82% 38.67% 1/29/12 $11.75 $2.49 $2.47 16.87 2.50% 42.11% Book value of equity Common shares outstanding (millions) Adjusted closing price Dividends per share $9,322 1,307 $103.34 $1.88 $12,522 1,380 $74.44 $1.56 $17,777 1,486 $63.87 $1.16 $17,898 1,523 $41.67 $1.04 Stock Performance Analysis Home Depot's stock value decreased from 2012 to 2015, from $11.75 per common share to $7.13 per common share. However, this decrease was not due to net losses, but rather, it was due to large stock buybacks and therefore, this decrease in book value is not a cause for concern. There was a significant increase in dividends per share ($1.04 to $1.88 in four years) but an overall decrease in the dividend yield ratio (2.5% to 1.82% in four years). Short-Term Solvency Assessment Because Home Depot is a high cash-generating company with high inventory turnover, the fact that its current ratio is less than two each of the four years is not indicative of a solvency problem. Year over year, working capital has maintained pretty level, meaning current assets and current liabilities were affected similarly, and the company increased the number of times it is able to turnover its inventory, selling products five days faster from 2, 14 to 2016. Current assets are highly dependent on inventory, as is indicated by Home Depot's low quick ratio, but this is not too alarming considering the impressive free cash flow and the face that it has increased by more than $2 million in four years. A slight increase in days sales in receivables indicates Home Depot might want to evaluate how it is managing credit sales, although it is such a slight increase that it isn't too alarming. This is also reflected in the accounts receivable turnover, which decreased slightly. Again, this is not too alarming. Liquidity Ratios Fiscal Year Ended Current ratio Working capital Acid-test ratio Inventory turnover (times) Days sales in inventory Accounts receivable turnover (times) Days sales in receivables 1/31/2016 2/1/2015 2/2/2014 1.36 1.37 1.43 $4,624.0 0.33 5.19 70.34 $4,191.0 0.29 5.05 72.35 $4,688.0 0.31 4.87 75.01 53.39 6.84 58.37 6.25 57.58 6.34 Free cash flow $7,870.0 $6,800.0 $6,239.0 Average inventory Average A/R $11,852.0 0 $1,752.00 $11,465.0 0 $1,506.00 $11,260.0 0 $1,446.50 2/3/201 3 1.35 $4,070. 0 0.34 $5,663. 0 Long-Term Solvency Assessment Debt to equity has increased 5.5 times in four years, which is due to both a significant increase in debt and a significant decrease in shareholder equity. This could be because of overly aggressive growth plans. However, the company's times-interest earned also increased significantly, which likely puts creditors at ease, as Home Depot is more than able to fulfill debt obligations and interest payments. Solvency Ratios Fiscal Year Ended 1/31/201 6 2/1/2015 2/2/2014 2/3/2013 3.78 2.09 1.39 0.68 14.22 18.15 11.92 12.77 $23,864. 0 $19,513. 0 $17,405. 0 $12,005. 0 Debt to equity Times-Interest Earned Long term liabilities Profitability Assessment Home Depot's slight increase in asset turnover year over year indicates its assets generated more sales in 2016 than in prior years. Return on sales and return on assets also increased year over year, meaning more income was generated for each dollar of sales and for each dollar of assets. The gross margin percentage stayed level across four years. However, the decrease in days to sell shows an increase in profitability. Return on equity is excellent, likely making shareholders very happy. Profitability Ratios Fiscal Year Ended Asset turnover Return on sales Gross margin % Return on assets Return on equity Average interest rate 1/31/2016 $2.25 6.93% 34.25% 15.58% 89.64% 2.53% 2/1/2015 $2.17 6.80% 34.20% 14.73% 58.09% 2.00% 2/2/2014 $2.03 5.87% 34.22% 11.90% 35.55% 3.04% $41,590.5 0 37.86% $40,564.0 0 37.62% $41,127.5 0 37.46% -$530.07 -$369.93 -$493.45 Adjusted net income $6,478.93 Average equity $7,819.00 $33,771.5 0 $5,975.07 $10,922.0 0 $29,642.0 0 $4,892.55 $15,149.5 0 $25,978.0 0 Average total assets Income tax rate Net of tax interest expense Average total liabilities 2/3/2013 5.25% 34.63% 37.98% -$385.15 $4,149.8 5 DuPont Analysis of ROA Both return on assets and return on sales increased, although return on sales only increased slightly. This indicates Home Depot has favorable financial leverage and was able to generate profits from sales and available assets. DuPont Analysis of ROA 1/31/201 6 2/1/201 5 2/2/201 4 Return on assets (calculated) 15.58% 14.73% 11.90% Return on sales Asset turnover Product 6.93% $2.25 15.58% 6.80% $2.17 14.73% 5.87% $2.03 11.90% Fiscal Year Ended 2/3/201 3 Stock Performance Assessment In 2013, there was a substantial gap between the stock's book and market value. Each year, that gap grew narrower, nearly closing in 2016. It appears Home Depot's stock has become less and less risky and transitioned from a growth stock to more of an income stock. This can also be assumed from the year-over-year increase in the dividend yield and the increase in dividend payout each year. With a P/E ratio well above the market average of 16, Home Depot is perceived as a growth stock, which is reflected in the significant increases in the stock's closing price and dividends per share. Stock Performance Fiscal Year Ended Book value per common share Earnings per share (basic) Earnings per share (diluted) P/E Ratio Dividend yield Dividend payout Book value of equity Common shares outstanding 1/31/201 6 2/1/2015 2/2/2014 2/3/2013 $5.04 $5.49 $5.46 23.17 1.87% 43.22% $7.13 $4.74 $4.71 22.17 1.80% 39.92% $9.07 $3.78 $3.76 20.44 2.03% 41.49% $11.96 $3.03 $3.00 22.43 1.72% 38.67% $9,322.0 $1,307.0 0 $12,522. 0 $1,380.0 0 $17,777. 0 $1,486.0 0 $6,316.0 $1,252.0 0 Adjusted closing price Dividends per share $126.51 $2.36 $104.42 $1.88 $76.85 $1.56 $67.30 $1.16 ACT 5140 - Accounting for Decision Makers HW #1 - Appendix A Question #1 Using the accompanying financial statements (Excel Workbook), assess The Home Depot concerning liquidity, solvency, profitability, and stock performance. For each area, you should calculate the ratios we discussed in class and provide a brief analysis of the ratios calculated. You do not need to perform vertical analysis for this assignment. I include historical stock price information and outstanding common share information below. You do not need to look beyond the financial statements to complete this assignment. DO NOT CHANGE THIS (THIS IS PART OF THE ASSIGNMENT) 1/29/201 7 $136.70 1/31/201 6 $121.69 2/1/2015 $99.05 2/2/2014 $71.36 1,203 1,252 1,307 1,380 1/29/201 7 1.25 $3,591 .37 1/31/201 6 1.32 $3,960 .37 2/1/2015 1.36 $4,033 .37 2/2/2014 1.43 $4,688 .38 Days sales in inventory Free cash flow $ $ $ $ Average A/R Credit Sales Average Inventory $ $ $ $ $ $ $ $ $ $ $ $ 1/29/201 7 $ 1/31/201 6 $ 2/1/2015 $ 2/2/2014 $ $ $ $ $ Fiscal Year Ended Adjusted Closing Price Common Shares Outstanding (millions) Liquidity Ratios Fiscal Year Ended Current ratio Working Capital Acid-test ratio Inventory turnover (times) Short Term Solvency Assessment: Longer Term Ratios: Fiscal Year Ended Debt to equity Interest coverage Long term disability Long Term Assessment: Profitability Assessment: DuPont ACT 5140 - Accounting for Decision Makers HW #1 - Appendix A Ratio Liquidity Ratios Current Ratio Working Capital Formula Current Assets/Current Liabilities Current Assets-Current Liabilities Acid-test Ratio Inventory Turnover (Cash and Cash Equivalents +Short term investments+ Current Receivables)/Current Liabilities Cost of Goods Sold/Average Inventory Days Sales in Inventory (Ending Inventory/Cost of Goods Sold)*365 Accounts Receivable Turnover Days Sales in Receivables Net Credit Sales/Average Accounts Receivable Accounts Receivable/Net Credit Sales*365 2017 2016 2015 2014 1.25 3591 1.32 3960 1.36 4033 1.43 4688 0.32 5.11 73.5 4 48.2 8 7.83 0.33 5.09 73.9 9 52.4 7 7.79 0.28 4.87 73.8 1 56.7 4 6.51 0.31 9.07 Liquidity Analysis: Current ratio Current ratio measures the ability of the company to pay its short term liabilities. A current ratio of 2 is considered good. The current ratio of Home Depot Inc. is 1.25, 1.32, 1.36 and 1.43 for years 2017, 2016, 2015, 2014 respectively. Although the current ratio of the company for last three years is less than 2 then also it is acceptable. Working Capital Working capital is a measure of liquidity and overall health of the company. The working capital of the company stood at $3,591 million in 2017 which is indicator of good health of the company. Working capital of the company was $4,033 million in 2015. Acid-Test Ratio This ratio measures the company ability to pay its current liabilities only with its quick assets. The ideal acid test ratio is 1. The acid test ratio for stood at 0.32, 0.33, 0.28 and 0.31 for the year 2017, 2016, 2015 and 2014 respectively which shows the inefficiency of the company to pay off its current liabilities in a short span of time. The ratio has shown a decline during past three years and it is a negative sign for the company. 80.45 108.86 6.71 Inventory Turnover This ratio measures how effectively and efficiently the company has managed its inventory. It shows how many times the company has turned its inventory. The ratio for Home depot is good for the past three years and is showing an increasing trend. Days Sales in Inventory This ratio indicates the number of days the company took to collect its sales. The ratio shows the efficiency of the collections department of the company. The ratio for the company is showing an improving trend in last three years, but then also the ratio for the company is not good and it stood at 73.54 for the year 2017. Accounts Receivable Turnover This ratio tells that how many times the company has turned its accounts receivables in cash. The accounts receivable turnover of the company stood at 52.47 which indicate an efficient management of accounts receivables by the company. Days Sales in Receivables This ratio calculates the number of days the credit sales had been outstanding. The ratio for the company stood at 7.83 in 2017 which is good. Ratio Debt-to-Equity Ratio Times Interest Earned Formula 2017 2016 2015 2014 Solvency Ratios Total Liabilities/Total Equity Income before Interest and Taxes/Interest Expenses 8.92 13.35 5.65 14.64 3.29 20.24 2.26 12.11 Solvency AnalysisDebt-to-Equity Ratio This ratio calculates the percentage of financing of the company that is coming from creditors and investors. The ratio for the company stood at 8.92, 5.65 and 3.29 during last three years which shows an increasing trend and depicts that the debts of the company are increasing year by year. Times Interest Earned It is also called interest coverage ratio and calculates the proportion amount of income that can be used to cover interest expenses of the future. Ratio Asset Turnover Return on Sales Gross Margin Return on Assets Return on Equity Formula Profitability Ratios Net Sales/Average Total Assets Operating Income/Net Sales Gross Margin/Sales Net Income/Average Total Assets Net Income/Shareholder's Equity 2017 2016 2015 2014 2.23 14.19% 34.16% 18.74% 1.84 2.16 13.30% 34.19% 17.11% 1.11 2.06 12.59% 34.13% 15.71% 0.68 3.86 11.63% 34.15% 26.36% 0.43 Profitability AnalysisAssets Turnover This ratio calculates how efficiently the company has used its assets in making sales. The ratio for the company stood at 2.23, 2.16, 2.06 and 3.86 respectively which show an increasing trend. Overall the ratio for the company is not good. Return on Sales This ratio calculates the operating income of the company in relation to its sales. The ratio for the company was 14.19%, 13.30%, 12.59% and 11.63% for the year 2017, 2016, 2015 and 2014 respectively. The ratio for the company is showing an increasing trend and is low. Gross Margin It is a profitability ratio that compares the gross profit of the company with its net sales. The ratio for the company has shown an increasing trend which means that the margin of the company is increasing year by year. Return on Assets It is a profitability ratio that measures net income produced by the assets during the year. The ratio of the company stood at 18.74%, 17.11%, 15.71% and 26.36% for the year 2017, 2016, 2015 and 2014 respectively which shows an increasing trend and improvement by the company in management of its assets. Return on Equity This ratio calculates how much profit each dollar of common stockholder's equity has generated. The return on equity of the company has shown an increasing trend during last three years. Ratio Formula Earnings per Share Price Earnings Ratio Dividend Yield Stock Performance Total Common Shareholder's Equity/ No. Of Common Shares A per Income Statement Market Price per Share of Common Stock/EPS Cash Dividend per Share/Market Value per Share Dividend Payout Total Dividends/Net income Book Value per Share 2017 2016 2015 2014 37.73 32.27 27.52 22.95 $6.47 21.13 0.02 $5.49 22.17 0.02 42.16 % $4.74 20.90 0.02 38.73 % $3.78 18.88 0.02 41.73% Stock Performance Analysis Book Value per Share It calculates the per share value of a company based on its equity available to common shareholders. The book value per share stood at 37.73, 32.27, 27.25 and 22.95 for the year 2017, 2016, 2015 and 2014 respectively. Earnings per Share This ratio calculates the amount of net income earned per share of stock outstanding. It shows how profitable the company is on its shareholder basis. The company has given a return of $6.47 per share in the year 2017 as compared to 5.49 and 4.74 for the year 2016 and 2015 respectively. Price Earnings Ratio It is a market prospect ratio that calculates the market value of a stock relative to its earnings. It is calculated by comparing the market price per share by the earnings per share. Dividend Yield Ratio This ratio calculates the amount of cash dividend distributed to common shareholders relative to the market value per share. The dividend yield ratio of the company is poor and is merely at 0.02. Dividend Payout 39.98% It measures the percentage of net income that is distributed in the form of dividends to the shareholders. The ratio for the company stood at 41.73%, 42.16%, 38.73% and 39.98% for the year 2017, 2016, 2015 and 2014 respectively. References: Nerou, Cheng- Financial Management of Non-Profit Organizations-2011 John Zietlow-Financial Management for Nonprofit Organizations: Policies and Practices-2006 Home Depot Inc. Ratio Analysis Ratio Liquidity Ratios Current Ratio Working Capital Acid-test Ratio Inventory Turnover Days Sales in Inventory Accounts Receivable Turnover Days Sales in Receivables Solvency Ratios Debt-to-Equity Ratio Times Interest Earned Profitability Ratios Asset Turnover Return on Sales Gross Margin Return on Assets Return on Equity Stock Performance Book Value per Share Earnings per Share Price Earning Ratio Dividend Yield Diviend Payout Home Depot Inc. Ratio Analysis Formula Current Assets/Current Liabilities Current Assets-Current Liabilities (Cash and Cash Equivalents+Short term investments+ Current Receivables)/Current Liabilities Cost of Goods Sold/Average Inventory (Ending Inventory/Cost of Goods Sold)*365 Net Credit Sales/Average Accounts Receivable Accounts Receivable/Net Credit Sales*365 Total Liabilities/Total Equity Income before Interest and Taxes/Interest Expenses Net Sales/Average Total Assets Operating Income/Net Sales Gross Margin/Sales Net Income/Average Total Assets Net Income/Shareholder's Equity Total Common Shareholder's Equity/ No. Of Common Shares A per Income Statement Market Price per Share of Common Stock/EPS Cash Dividend per Share/Market Value per Share Total Dividends/Net income 2017 2016 2015 2014 1.25 3591 1.32 3960 1.36 4033 1.43 4688 0.32 5.11 73.54 48.28 7.83 0.33 5.09 73.99 52.47 7.79 0.28 4.87 73.81 56.74 6.51 0.31 9.07 80.45 108.86 6.71 8.92 13.35 5.65 14.64 3.29 20.24 2.26 12.11 2.23 14.19% 34.16% 18.74% 1.84 2.16 13.30% 34.19% 17.11% 1.11 2.06 12.59% 34.13% 15.71% 0.68 3.86 11.63% 34.15% 26.36% 0.43 37.73 $6.47 21.13 0.02 41.73% 32.27 $5.49 22.17 0.02 42.16% 27.52 $4.74 20.90 0.02 38.73% 22.95 $3.78 18.88 0.02 39.98% HOME DEPOT INC $ in millions Year Ending NET SALES Cost of sales GROSS PROFIT Operating Expenses: Selling, General and Administrative Depreciation and Amortization Total Operating Expenses OPERATING INCOME 1/29/2017 $94,595 62,282 32,313 1/31/2016 $88,519 58,254 30,265 2/1/2015 $83,176 54,787 28,389 2/2/2014 $78,812 51,897 26,915 17,132 1,754 18,886 13,427 16,801 1,690 18,491 11,774 16,280 1,640 17,920 10,469 16,122 1,627 17,749 9,166 936 12,491 4,534 $7,957 753 11,021 4,012 $7,009 493 9,976 3,631 $6,345 699 8,467 3,082 $5,385 Basic earnings per share Diluted earnings per share $6.47 $6.45 $5.49 $5.46 $4.74 $4.71 $3.78 $3.76 Dividends per share $2.76 $2.36 $1.88 $1.56 Interest and Other, net Earnings before income taxes Provision for Income Taxes NET EARNINGS HOME DEPOT INC $ in millions As of 1/29/2017 1/31/2016 Current assets: Cash and cash equivalents Accounts receivable, net Merechandise inventories Other current assets $2,538 2,029 12,549 608 $2,216 1,890 11,809 569 Total Current Assets 17,724 16,484 Property & Equipment, at cost Less Accumulated Depreciation and Amortization Net Property & Equipment 40,426 18,512 21,914 39,266 17,075 22,191 Goodwill Other assets TOTAL ASSETS 2,093 1,235 $42,966 2,102 1,196 $41,973 LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities: Short-term debt Accounts payable Accrued salaries & related expenses Sales taxes payable Deferred revenue Income taxes payable Current installments of long-term debt Other accrued expenses $710 7,000 1,484 508 1,669 25 542 2,195 $350 6,565 1,515 476 1,566 34 77 1,941 Total current liabilities 14,133 12,524 Long-term debt, excluding current installments Other long-term liabilities Deferred income taxes Total liabilities 22,349 1,855 296 38,633 20,789 1,965 379 35,657 88 9,787 35,519 (867) (40,194) 88 9,347 30,973 (898) (33,194) ASSETS Shareholders equity: Common stock Paid-in capital Retained earnings Accumulated other comprehensive income (loss) Treasury stock, at cost Total shareholders equity TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 4,333 6,316 $42,966 $41,973 2/1/2015 2/2/2014 $1,723 1,484 11,079 1,016 $1,929 1,448 11,439 795 15,302 15,611 38,513 15,793 22,720 39,064 15,716 23,348 1,353 571 $39,946 1,289 602 $40,850 $290 5,807 1,391 434 1,468 35 38 1,806 $0 6,071 1,428 396 1,337 12 33 1,646 11,269 10,923 16,869 1,844 642 30,624 14,691 2,200 514 28,328 88 8,885 26,995 (452) (26,194) 88 8,402 23,180 46 (19,194) 9,322 12,522 $39,946 $40,850 HOME DEPOT INC $ in millions Year Ending OPERATING ACTIVITIES: Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization Stock-based compensation expense Gain on sales of investments Changes in Assets and Liabilities, net of the effects of acquisition and disposition Receivables, net Merchandise inventories Other current assets Accounts payable and accrued expenses Deferred revenue Income taxes payable Deferred income taxes Other Net cash provided by operating activities INVESTING ACTIVITIES: Capital expenditures Proceeds from sales of investments Payments for business acquired Proceeds from sales of property & equipment Net cash used by investing activities FINANCING ACTIVITIES: Proceeds from short-term borrowings, net Proceeds from long-term borrowings, net of discount Repayments of long-term debt Repurchases of common stock Proceeds from sales of common stock Cash dividends paid to stockholders Other financing activities Net cash used by financing activities Change in Cash and Cash Equivalents Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year SUPPLEMENTAL DISCLOSURE OF CASH PAYMENTS MADE FOR Interest, net of capitalized interest Income taxes 1/29/2017 1/31/2016 2/1/2015 2/2/2014 $7,957 $7,009 $6,345 $5,385 1,973 267 0 1,990 244 (144) 1,940 225 (323) 1,927 228 0 (138) (769) (48) 446 99 109 (117) 4 (181) (673) (5) 888 109 154 15 (33) (81) (278) (199) 244 146 168 159 (104) (15) (625) (5) 605 75 119 (31) (35) $9,783 $9,373 $8,242 $7,628 (1,621) 0 0 38 (1,503) 144 (1,666) 43 (1,442) 323 (200) 48 (1,389) 0 (206) 88 ($1,583) ($2,982) ($1,271) ($1,507) 360 4,959 (3,045) (6,880) 218 (3,404) (78) 60 3,991 (39) (7,000) 228 (3,031) 4 290 1,981 (39) (7,000) 252 (2,530) (25) 0 5,222 (1,289) (8,546) 241 (2,243) (37) ($7,870) ($5,787) ($7,071) ($6,652) $330 (8) $604 (111) ($100) (106) ($531) (34) 2,216 $2,538 1,723 $2,216 1,929 $1,723 2,494 $1,929 $924 $4,623 $874 $3,853 $782 $3,435 $639 $2,839