If you found the right numbers in the Notes to Consolidated Financial Statements section of the annual report, you now know that Home Depot has hidden over $$7\mathrm{.}7$ Billion of long$-$term debt in plain sight. This number is roughly $25\%$ of their reported liabilities!

To understand why so much contractually obligated debt can be excluded in the reported liabilities, consider what a bank might ask if you wanted to borrow money. They would definitely want to know about all of your debts, such as a student loan, a car loan, and credit card balances. But, would you include the remaining months of rent due on the lease you signed for the apartment you are renting? Probably not, and neither does Home Depot. Therefore, you and Home Depot both have "off balance sheet" items that you don't consider worth mentioning to anyone asking about your financial solvency.

Debts are debts, so let's adjust Home Depot's Total Liabilities and use the adjusted Assets $($less Goodwill$)$ that we calculated earlier.

What is the new adjusted Debt to Asset ratio?

Hint: Divide $($Total Liabilities $+$ Operating Leases$)$ by $($Total Assets $-$ Goodwill$)$

$88\mathrm{.}5\%$

$42\mathrm{.}7\%$

$108\%$

$99\mathrm{.}3\%$

$39\mathrm{.}8\%$