Question
Hi all I am studying HOME DEPOT, INC and I was asked to calculate Time Value of Money of the company Coud anyone help me
Hi all I am studying HOME DEPOT, INC and I was asked to calculate Time Value of Money of the company
Coud anyone help me how to calculate the following time value of money figures: 1. Calculate the present value of the company based on the given interest rate and expected revenues over time.
2. Suppose the risk of the company changes based on an internal event. Recalculate the present value of the company.
3. Suppose that a potential buyer has offered to buy this company in five years. Based on the present value you calculated above, what would be a reasonable amount for which the company should be sold at that future time?
B. What are the implications of the change in present value based on risk? In other words, what does the change mean to the company, and how would you, as a financial manager, interpret it? Be sure to justify your reasoning.
C. Based on the future value of the company that you calculated, and being mindful of the need to effectively balance portfolio risk with return, what recommendation would you make about purchasing the company as an investment at that price? Be sure to substantiate your reasoning.
Home Depot Inc., Consolidated Statement of Cash Flows (USD $ in millions)
12 months ended | Jan 31, 2016 | Feb 1, 2015 | Feb 2, 2014 | Feb 3, 2013 | Jan 29, 2012 | Jan 30, 2011 | |
---|---|---|---|---|---|---|---|
Net earnings | 7,009 | 6,345 | 5,385 | 4,535 | 3,883 | 3,338 | |
Depreciation and amortization | 1,863 | 1,786 | 1,757 | 1,684 | 1,682 | 1,718 | |
Stock-based compensation expense | 244 | 225 | 228 | 218 | 215 | 214 | |
Gain on sales of investments | (144) | (323) | |||||
Goodwill impairment | 97 | ||||||
Receivables, net | (181) | (81) | (15) | (143) | (170) | (102) | |
Merchandise inventories | (546) | (124) | (455) | (350) | 256 | (355) | |
Other current assets | (5) | (199) | (5) | 93 | 159 | 12 | |
Accounts payable and accrued expenses | 888 | 244 | 605 | 698 | 422 | (133) | |
Deferred revenue | 109 | 146 | 75 | 121 | (29) | 10 | |
Income taxes payable | 154 | 168 | 119 | 87 | 14 | (85) | |
Deferred income taxes | 15 | 159 | (31) | 107 | 170 | 104 | |
Other | (33) | (104) | (35) | (172) | 49 | (136) | |
Changes in assets and liabilities, net of the effects of acquisitions | 401 | 209 | 258 | 441 | 871 | (685) | |
Reconciliation of net earnings to net cash provided by operating activities | 2,364 | 1,897 | 2,243 | 2,440 | 2,768 | 1,247 | |
Net cash provided by operating activities | 9,373 | 8,242 | 7,628 | 6,975 | 6,651 | 4,585 | |
Capital expenditures, net of non-cash capital expenditures | (1,503) | (1,442) | (1,389) | (1,312) | (1,221) | (1,096) | |
Proceeds from sales of investments | 144 | 323 | |||||
Proceeds from sale of business, net | 101 | ||||||
Payments for businesses acquired, net | (1,666) | (200) | (206) | (170) | (65) | ||
Proceeds from sales of property and equipment | 43 | 48 | 88 | 50 | 56 | 84 | |
Net cash used in investing activities | (2,982) | (1,271) | (1,507) | (1,432) | (1,129) | (1,012) | |
Proceeds from (repayments of) short-term borrowings, net | 60 | 290 | |||||
Proceeds from long-term borrowings, net of discount | 3,991 | 1,981 | 5,222 | 1,994 | 998 | ||
Repayments of long-term debt | (39) | (39) | (1,289) | (32) | (1,028) | (1,029) | |
Repurchases of common stock | (7,000) | (7,000) | (8,546) | (3,984) | (3,470) | (2,608) | |
Proceeds from sales of common stock | 228 | 252 | 241 | 784 | 306 | 104 | |
Cash dividends paid to stockholders | (3,031) | (2,530) | (2,243) | (1,743) | (1,632) | (1,569) | |
Other financing activities | 4 | (25) | (37) | (59) | (218) | (347) | |
Net cash used in financing activities | (5,787) | (7,071) | (6,652) | (5,034) | (4,048) | (4,451) | |
Effect of exchange rate changes on cash and cash equivalents | (111) | (106) | (34) | (2) | (32) | 2 | |
Change in cash and cash equivalents | 493 | (206) | (565) | 507 | 1,442 | (876) | |
Cash and cash equivalents at beginning of year | 1,723 | 1,929 | 2,494 | 1,987 | 545 | 1,421 | |
Cash and cash equivalents at end of year | 2,216 | 1,723 | 1,929 | 2,494 | 1,987 | 545 |
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