Chapter 8 Liabilities and Stockholders' Equity MBA 8-8 Debt and price-earnings ratios The Home Depot, Inc. (HD) operates over 2,200 home improvement retail stores and is a com- petitor of Lowe's (LOW). The following data (in millions) were adapted from recent financial statements of The Home Depot. Year 1 Year 2 Total assets Total liabilities ...... $44,529 $42,966 Total stockholders' equity 43,075 38,633 1,454 4,333 Earnings per share $7.29 $6.45 1. Compute the debt ratio for Years 1 and 2. Round to one decimal place. 2. Given your answer to part (1), what is the ratio of stockholders' equity to total assets for Years 1 and 2? Round to one decimal place. 3. Are Home Depot's operations financed primarily with liabilities or equity? 4. Comparing Years 1 and 2, should creditors feel more or less safe in Year 2? 5. With a market price of $187.41, compute the price-earnings ratio for Year 2. 6. With a market price of $129.59, compute the price-earnings ratio for Year 1. 7. Compare the results from parts (5) and (6). Comment on any differences