. Home Depot (HD) has been engaged in a rather lengthy and large stock buy-back program. Over about the last 10 years the number of HD shares outstanding has fallen by about 35%.

It appears that the stock buyback program has been largely financed via long-term debt especially in recent years. That is, HD borrows in the bond market, and uses the proceeds to repurchase shares of its stock.

Long-Term Debt, Paid-in-Capital plus Retained Earnings, and Book Value

Dates February, 2019 February, 2015 Long-Term Debt Paid-in-Capital + Retained Earnings Treasury Stock (at cost) Stockholders' Equity Source: Mergent $28 Billion $57 Billion $58 Billion ($2 Billion) $17 Billion $36 Billion $26 Billion $ 9 Billion a) What are the essential differences between dividends and stock buybacks? b) What does it mean if a company like HD has negative Stockholders' Equity? c) Does HDs stock buyback make it a more or less risky company? Dates February, 2019 February, 2015 Long-Term Debt Paid-in-Capital + Retained Earnings Treasury Stock (at cost) Stockholders' Equity Source: Mergent $28 Billion $57 Billion $58 Billion ($2 Billion) $17 Billion $36 Billion $26 Billion $ 9 Billion a) What are the essential differences between dividends and stock buybacks? b) What does it mean if a company like HD has negative Stockholders' Equity? c) Does HDs stock buyback make it a more or less risky company