Directions:

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 from Appendix A 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.

PLEASE USE APPENDIX B WHICH IS AN ANALYSIS OF STARBUCKS AS REFERENCE FOR HELP WITH THIS ASSIGNMENT.THE STARBUCKS ASSIGNMENT IS FOR YOUR ADDED GUIDANCE ONLY.DO NOT COPY AND PASTE STARBUCKS ASSIGNMENT INTO YOUR ASSIGNMENT.

SOME GUIDANCE:

• YOU DONT NEED TO COMPARE HOME DEPOT RATIOS WITH INDUSTRY RATIOS.YOU CAN DO THAT FOR WALMART ASSIGNMENT LATER IN THE COURSE
• PLEASE DONT OVERTHINK THIS ASSIGNMENT.I KNOW THIS IS THE ONLY ASSIGNMENT WHICH IS OUTSIDE THE TEXTBOOK SO I HAVE PROVIDED LOTS OF MATERIALS FOR THE SAME.

You do not need to look beyond the financial statements to complete this assignment.

Answer all the questions.Please submit your work in Word or PDF formats only.You can submit an Excel file to support calculations,but pleasecut and pasteyour 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.

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. 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 from Appendix A 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 2/1/2015 Adjusted Closing Price $103.34 Common Shares Outstanding (millions) 1,307 2/2/2014 $74.44 2/3/2013 $63.87 1/29/2012 $41.67 1,380 1,486 1,523 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 Interest and Other (Income) Expense: Interest and Investment Income Interest Expense Other 2/1/2015 $83,176 54,222 28,954 2/2/2014 $78,812 51,422 27,390 2/3/2013 $74,754 48,912 25,842 1/29/2012 $70,395 46,133 24,262 16,834 1,651 18,485 10,469 16,597 1,627 18,224 9,166 16,508 1,568 18,076 7,766 16,028 1,573 17,601 6,661 (337) 830 0 (12) 711 0 (20) 632 (67) (13) 606 0 Interest and Other, net Earnings before income taxes Provision for Income Taxes NET EARNINGS 493 9,976 3,631 $6,345 699 8,467 3,082 $5,385 545 7,221 2,686 $4,535 593 6,068 2,185 $3,883 Basic earnings per share Diluted earnings per share $4.74 $4.71 $3.78 $3.76 $3.03 $3.00 $2.49 $2.47 Dividends per share $1.88 $1.56 $1.16 $1.04 HOME DEPOT INC $ in millions As of 2/1/2015 2/2/2014 2/3/2013 ASSETS Current assets: Cash and cash equivalents Accounts receivable, net Merechandise inventories Other current assets $1,723 1,484 11,079 1,016 $1,929 1,398 11,057 895 $2,494 1,395 10,710 773 Total Current Assets 15,302 15,279 15,372 Property & Equipment, at cost Less Accumulated Depreciation and Amortization Net Property & Equipment 38,513 15,793 22,720 39,064 15,716 23,348 38,491 14,422 24,069 Goodwill Other assets TOTAL ASSETS 1,353 571 $39,946 1,289 602 $40,518 1,170 473 $41,084 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 $290 5,807 1,391 434 1,468 35 38 1,806 $0 5,797 1,428 396 1,337 12 33 1,746 $0 5,376 1,414 472 1,270 22 1,321 1,587 Total current liabilities 11,269 10,749 11,462 Long-term debt, excluding current installments Other long-term liabilities Deferred income taxes Total liabilities 16,869 1,844 642 30,624 14,691 2,042 514 27,996 9,475 2,051 319 23,307 Shareholders equity: Common stock Paid-in capital Retained earnings Accumulated other comprehensive income (loss) Treasury stock, at cost Total shareholders equity 88 8,885 26,995 (452) (26,194) 9,322 88 8,402 23,180 46 (19,194) 12,522 88 7,948 20,038 397 (10,694) 17,777 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $39,946 $40,518 $41,084 1/29/2012 $1,987 1,245 10,325 963 14,520 38,975 14,527 24,448 1,120 430 $40,518 $0 4,856 1,372 391 1,147 23 30 1,557 9,376 10,758 2,146 340 22,620 87 6,966 17,246 293 (6,694) 17,898 $40,518 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 Goodwill impairment 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 long-term liabilities Other Net cash provided by operating activities INVESTING ACTIVITIES: Capital expenditures Proceeds from sales of investments Proceeds from sale of business Payments for business acquired Proceeds from sales of property & equipment 2/1/2015 $6,345 1,786 225 (323) (81) (124) (199) 244 146 168 159 (152) 48 $8,242 (1,442) 323 0 (200) 48 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 ($1,271) Net cash used by financing activities ($7,071) 290 1,981 (39) (7,000) 252 (2,530) (25) Change in Cash and Cash Equivalents Effect of exchange rate changes on cash and cash equivalents ($100) (106) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 1,929 $1,723 SUPPLEMENTAL DISCLOSURE OF CASH PAYMENTS MADE FOR Interest, net of capitalized interest Income taxes $782 $3,435 2/2/2014 2/3/2013 1/29/2012 $5,385 $4,535 $3,883 1,757 228 0 1,684 218 97 1,682 215 0 (15) (455) (5) 605 75 119 (31) 13 (48) (143) (350) 93 698 121 87 107 (180) 8 (170) 256 159 422 (29) 14 170 (2) 51 $7,628 $6,975 $6,651 (1,389) 0 0 (206) 88 (1,312) 0 0 (170) 50 (1,221) 0 101 (65) 56 ($1,507) ($1,432) ($1,129) 0 5,222 (1,289) (8,546) 241 (2,243) (37) 0 0 (32) (3,984) 784 (1,743) (59) 0 1,994 (1,028) (3,470) 306 (1,632) (218) ($6,652) ($5,034) ($4,048) ($531) (34) $509 (2) $1,474 (32) 2,494 $1,929 1,987 $2,494 545 $1,987 $639 $2,839 $617 $2,482 $580 $1,865 Nova Southeastern University H. Wayne Huizenga School of Business & Entrepreneurship Assignment for Course: ACT 5140 - Accounting for Decision Makers Submitted to: Dr. Vik Desai Submitted by: Date of Submission: Sunday, June 26th 2016 Title of Assignment: Financial Analysis Assignment - Wal-Mart CERTIFICATION OF AUTHORSHIP: I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledged and disclosed in the paper. I have also cited any sources from which I used data, ideas or words, either quoted directly or paraphrased. I also certify that this paper was prepared by me specifically for this course. Student's Signature: Nicholas Lewis ***************************************************************** Instructor's Grade on Assignment: Instructor's Comments: 1 ACT 5140 - Accounting for Decision Makers Wal-Mart Analysis Assignment 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. Part 1 Perform a vertical and horizontal analysis of Wal-Mart Stores, Inc.'s income statements and balance sheets as of January 31, 2015. In performing this analysis, consider any notable trends or changes that you observe that may provide useful information concerning its financial condition. Also use as many years' worth of statements as you feel necessary. You should write up your results in paragraph form. Vertical Analysis Also known as a common-size statement or common-size analysis, vertical analysis is a method of analyzing a company's financial statements. In this analysis, each line item in a particular financial statement is measured as a percentage of a base measurement within that statement. For example, in our analysis of WalMart's income statements, line items such as interest expense, cost of goods sold, and operating income are measured as a percentages of total sales, our base measurement for that financial statement. Regarding WalMart's balance sheet, two base accounts are used. Total assets is used as a base measurement for other asset line items, while total shareholders' equity and liabilities is used as a base measurement for liability and equity line items. Calculating and comparing line items in this way facilitates the ability to compare current and past financial statements within a company, as well as external analysis with industry benchmarks or the measurements of competitors. By utilizing percentages, such comparisons can be made regardless of the competitor's size. A vertical analysis of Wal-Mart's income statement and balances sheet was performed for this report. The vertical analysis for Wal-Mart's income statement is contained in Appendix A, the vertical analysis for WalMart's balance sheet is contained in Appendix B. An analysis of both is listed below. Comparison data to industry standards is contained in Appendixes E - H. Income Statement: As mentioned above, the process of vertical analysis measures each line item in a particular financial statement as a percentage of a base measurement. For purposes of the income statement, total net revenues (Sales) was used as the base measurement and each line item in the statement is represented as a percentage thereof. The vertical analysis was conduct for the fiscal year 2012 - 2015 and can be used to compare those years with one another to discern trends and draw conclusions about Wal-Mart's wellbeing. Looking generally at the analysis, we see INPUT YOUR OBSERVATIONS HERE. We can infer from this data that Wal-Mart's INPUT YOUR OBSERVATIONS HERE. 2 The remaining line items on Wal-Mart's income statement represent INPUT YOUR OBSERVATIONS HERE. However, Wal-Mart does not operate in isolation and can be compared to industry standards. Wal-Mart INPUT YOUR OBSERVATIONS HERE. (Mergent: First Research, 2016). Compared to industry standards in the discount retail industry, INPUT YOUR OBSERVATIONS HERE. Balance Sheet: Vertical analysis was also conducted on Wal-Mart's balance sheet. As previously mentioned, there are two base measurements utilized in the vertical analysis of the balance sheet. These measurements are, total assets, and total shareholders worth and liabilities. Calculating other line items in the asset category as a percentage of total assets, several trends emerge. INPUT YOUR OBSERVATIONS HERE. THIS IS AN EXAMPLE OF WHAT COULD BE DONE BY YOU.... Figure 1: When compared to the industry averages, INPUT YOUR OBSERVATIONS HERE. Comparing liabilities, INPUT YOUR OBSERVATIONS HERE. Horizontal Analysis 3 Where vertical analysis allows for the comparison of line items as a percentage of some base measurement within a particular financial statement, horizontal analysis measures changes in each line item relative to a base year. These changes can be recorded numerically or as a percentage to track changes in line items over time, relative to their value in the original base year. As such, it is possible to track revenue, liabilities, or any other financial measurement relative to itself as it occurred any number of years ago. For purpose of our analysis, we use 2012 as the base period against which the line items will be analyzed. The horizontal analysis for Wal-Mart's income statement is contained in Appendix C, the horizontal analysis for Wal-Mart's balance sheet is contained in Appendix D. An analysis of both is listed below. Comparison data to industry standards is contained in Appendixes E - H. Income Statement: INPUT YOUR OBSERVATIONS HERE. Balance Sheet: We can also use horizontal analysis to examine Wal-Mart's Balance Sheet. INPUT YOUR OBSERVATIONS HERE. Part 2 Assess Wal-Mart, Stores Inc. concerning liquidity, solvency, profitability, and stock performance as of January 31, 2015. For each area, you should calculate the ratios we discussed in class and provide an analysis of the ratios calculated. I include historical stock price information and outstanding common share information below. Fiscal Year Ended Adjusted Closing Price Common Shares Outstanding (millions) 1/31/2015 $83.94 3,228 1/31/2014 $71.97 3,233 1/31/2013 $65.79 3,314 1/31/2012 $56.32 3,418 Ratio Analysis There are several different sets of ratio's which can be constructed to determine the financial health of a business as well as key relationships between certain financial measures. These ratios can be categorized into several different sections dependent upon the information they provide. In the next section, the report will analyze ratios concerning Wal-Mart's liquidity, solvency, profitability, and stock performance. The ratio analysis will also include a DuPont Analysis. Liquidity: The liquidity ratios for Wal-Mart can be found below in Table 1: 4 Table 1 - List of Liquidity Ratios for Wal-Mart Stores: FY ending 1/31/2012-1/31/2015. INPUT YOUR LIQUIDITY RATIOS CALCULATED HERE.... The above ratios were calculated as follows: Current Ratio: Current assets / Current liabilities Working Capital: Current assets - Current liabilities Acid-test ratio: (Cash + Marketable Securities + Current Accounts Receivables) / current liabilities Inventory turnover: Cost of goods sold (sales) / average inventory Days sales in inventory: 365 / inventory turnover Accounts receivables turnover: Net sales / average accounts receivables Days sales in receivables: 365 / A/R turnover Free cash flow: Operating cash flow + capital expenditures Average Inventory: (inventory 2015 + inventory 2014)/2 Average A/R: (accounts receivables 2015 + accounts receivables 2014)/2 As their names states, the above mentioned ratios provide information on a business's liquidity. For instance, INPUT YOUR OBSERVATIONS HERE. A refinement of the current ratio, the acid test INPUT YOUR OBSERVATIONS HERE. Working capital measures the ability of a business to use resources to assist operations in the short term. Here, Wal-Mart INPUT YOUR OBSERVATIONS HERE. Solvency: The solvency ratios for Wal-Mart can be found below in Table 2: Table 2 - List of Solvency Ratios for Wal-Mart Stores: FY ending 1/31/2012-1/31/2015. INPUT YOUR RATIOS HERE. The above ratios were calculated as follows: Debt to equity: long-term liabilities / total equity Interest coverage: operating income / interest expense Long-term liabilities: total liabilities - total current liabilities Just as there are ratios that measure liquidity so too are there ratios that measure Wal-Mart's solvency and long term liquidity. These include Debt to Equity and Interest coverage. Long term Liabilities is simply a set sum of figures provided on Wal-Mart's balance sheet. It is used in the other solvency ratios. Debt to equity is a ratio measuring, as it sounds, Wal-Mart's long term liabilities (debt) to its total equity. As mentioned above in the vertical analysis, Wal-Mart maintains INPUT YOUR OBSERVATIONS HERE. 5 Similarly, Wal-Mart should be concerned with INPUT YOUR OBSERVATIONS HERE. Profitability: The profitability ratios for Wal-Mart can be found below in Table 3: Table 3 - List of Profitability Ratios for Wal-Mart Stores: FY ending 1/31/2012-1/31/2015. INPUT YOUR RATIOS HERE. The above ratios were calculated as follows: Asset turnover: total net revenues / average total assets ; Sales / Average total Assets Return on sales: adjusted net income / total net revenues Gross margin %: (total net revenue - cost of sales) / total net revenue Return on assets: adjusted net income / average total assets Return on equity: net earnings / average equity Average interest rate: interest expense / average total liabilities Average total assets: (total assets 2015 + total assets 2014)/2 Income tax rate: Provision for income taxes / earnings before income taxes Net of tax interest expense: income tax rate * interest expense Adjusted net income: net earning + net of tax interest expense Average equity: (total shareholders' equity 2015 + total shareholders' equity 2014)/2 Average total liabilities: (total liabilities 2015 + total liabilities 2014)/2 Another key set of ratios are stated above. While the previous ratios provided insight on Wal-Mart's solvency and liquidity, the above mentioned measures provide insight as to how well Wal-Mart is performing is chief business goal of generating revenues. There are many ratio's involved in ascertaining the Wal-Mart's performance and profitability. The first measure is asset turnover ratio, which can be found by dividing sales by average total assets. WalMart's asset turnover ratio demonstrates that Wal-Mart INPUT YOUR OBSERVATIONS HERE. Return on sales is the next ratio and it is calculated by dividing adjusted net income by total net revenues. This measurement is closely related to the asset turnover ratio. Where the asset turnover ratio measured how effective Wal-Mart was at utilizing its assets to generate sales, return on sales measures Wal-Mart's ability to generate profits from those sales (Hartgraves & Morse, 2015, p.482). This measurement shows that INPUT YOUR OBSERVATIONS HERE. Gross margin represents the percentage of sales revenue that remains after the costs associated with that sale have been accounted for (\"Gross Margin\