Ratio Analysis

Based on the financial statements of Home Depot for the fiscal year that ended February 3, 2019, calculate the following ratios for the last two fiscal years and indicate whether they are getting better or worse:

1.

a) Current Ratio (x)

FYE 1/28/18

FYE 2/3/19

Better/Worse

b) Quick Ratio (x)

FYE 1/28/18

FYE 2/3/19

Better/Worse

c) Inventory Turnover(x)

FYE 1/28/18

FYE 2/3/19

Better/Worse

d) Days Sales Outstanding (Days)

FYE 1/28/18

FYE 2/3/19

Better/Worse

e) Fixed Asset Turnover (x)

FYE 1/28/18

FYE 2/3/19

Better/Worse

f) Total Asset Turnover (x)

FYE 1/28/18

FYE 2/3/19

Better/Worse

g) Total Debt to Total Capital (%)

FYE 1/28/18 %

FYE 2/3/19 %

Better/Worse

h) Times Interest Earned (x)

FYE 1/28/18

FYE 2/3/19

Better/Worse

i) Operating Profit Margin (%)

FYE 1/28/18 %

FYE 2/3/19 %

Better/Worse

j) Net Profit Margin (%)

FYE 1/28/18 %

FYE 2/3/19 %

Better/Worse

k) Return on Assets (%)

FYE 1/28/18 %

FYE 2/3/19 %

Better/Worse

l) Return on Common Equity (%)

FYE 1/28/18 %

FYE 2/3/19 %

Better/Worse

m) Return on Invested Capital (%)

FYE 1/28/18 %

FYE 2/3/19 %

Better/Worse

n) Basic Earning Power (%)

FYE 1/28/18 %

FYE 2/3/19 %

Better/Worse

Table of Contents THE HOME DEPOT, INC. CONSOLIDATED BALANCE SHEETS February 3, 2019 January 28, 2018 $ in millions, except per share data Assets Current assets: Cash and cash equivalents Receivables, net Merchandise inventories Other current assets Total current assets Net property and equipment Goodwill Other assets Total assets 1,778 $ 1,936 13,925 890 18,529 22,375 2,252 847 44,003 $ 3,595 1,952 12,748 638 18,933 22,075 2,275 1,246 44,529 $ $ $ Liabilities and Stockholders' Equity Current liabilities: Short-term debt Accounts payable Accrued salaries and related expenses Sales taxes payable Deferred revenue Income taxes payable Current installments of long-term debt Other accrued expenses Total current liabilities Long-term debt, excluding current installments Deferred income taxes Other long-term liabilities Total liabilities 1,339 7,755 1,506 656 1,782 11 1,056 2,611 16,716 26,807 491 1,867 45,881 1,559 7,244 1,640 520 1,805 54 1,202 2,170 16,194 24,267 440 2,174 43,075 89 Common stock, par value $0.05; authorized: 10,000 shares; issued: 1,782 at February 3, 2019 and 1,780 shares at January 28, 2018; outstanding: 1,105 shares at February 3, 2019 and 1,158 shares at January 28, 2018 Paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock, at cost, 677 shares at February 3, 2019 and 622 shares at January 28, 2018 Total stockholders' (deficit) equity Total liabilities and stockholders' equity 89 10,578 46,423 (772) 10,192 39,935 (566) (58,196) (1,878) 44,003 $ (48,196) 1,454 44,529 $ See accompanying notes to consolidated financial statements. Table of Contents THE HOME DEPOT, INC. CONSOLIDATED STATEMENTS OF EARNINGS $ Fiscal 2018 108,203 $ 71,043 37,160 Fiscal 2017 100,904 $ 66,548 34,356 Fiscal 2016 94,595 62,282 32,313 17,864 1,811 17,132 1,754 in millions, except per share data Net sales Cost of sales Gross profit Operating expenses: Selling, general and administrative Depreciation and amortization Impairment loss Total operating expenses Operating income Interest and other income) expense: Interest and investment income Interest expense Other Interest and other, net Earnings before provision for income taxes Provision for income taxes Net earnings 19,513 1,870 247 21,630 15,530 19,675 14,681 18,886 13,427 (36) (74) 1,057 (93) 1,051 16 974 14,556 3,435 11,121 $ 983 13,698 5,068 8,630 972 - 936 12,491 4,534 7,957 $ $ Basic weighted average common shares Basic earnings per share $ 1,137 9.78 $ 1,178 7.33 $ 1,229 6.47 Diluted weighted average common shares Diluted earnings per share 1,143 9.73 $ 1,184 7.29 $ 1,234 6.45 S Fiscal 2018 includes 53 weeks. Fiscal 2017 and fiscal 2016 include 52 weeks. See accompanying notes to consolidated financial statements. Table of Contents THE HOME DEPOT, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Fiscal 2018 Fiscal 2017 Fiscal 2016 $ 11,121 $ 8,630 $ 7,957 311 in millions Net earnings Other comprehensive (loss) income: Foreign currency translation adjustments Cash flow hedges, net of tax Other Total other comprehensive (loss) income Comprehensive income (267) 53 (3) 34 (9) 301 31 (206) 10,915 $ $ 8,931 $ 7,988 Fiscal 2018 includes 53 weeks. Fiscal 2017 and fiscal 2016 include 52 weeks. See accompanying notes to consolidated financial statements. Table of Contents THE HOME DEPOT, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Fiscal 2018 Fiscal 2017 Fiscal 2016 in millions Common Stock: Balance at beginning of year Shares issued under employee stock plans Balance at end of year $ 89 $ 88 $ 88 89 88 10,192 9,347 104 9,787 132 76 Paid-in Capital: Balance at beginning of year Shares issued under employee stock plans Tax effect of stock-based compensation Stock-based compensation expense Balance at end of year 282 273 10,192 97 267 9,787 10,578 35,519 30,973 Retained Earnings: Balance at beginning of year Cumulative effect of accounting change Net earnings Cash dividends Other Balance at end of year 39,935 75 11,121 (4,704) (4) 46,423 8,630 (4,212) 7,957 (3,404) (7) 35,519 (2) 39,935 (898) Accumulated Other Comprehensive Income (Loss): Balance at beginning of year Foreign currency translation adjustments Cash flow hedges, net of tax Other Balance at end of year (566) (267) 53 (867) 311 34 8 (9) (566) (772) (867) Treasury Stock: Balance at beginning of year Repurchases of common stock Balance at end of year Total stockholders' (deficit) equity (48,196) (10,000) (58,196) (1,878) $ (40,194) (8,002) (48,196) 1,454 $ (33,194) (7,000) (40,194) 4,333 $ Fiscal 2018 includes 53 weeks. Fiscal 2017 and fiscal 2016 include 52 weeks. See accompanying notes to consolidated financial statements. Table of Contents THE HOME DEPOT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Fiscal 2018 Fiscal 2017 Fiscal 2016 $ 11,121 $ 8,630 $ 7,957 2,062 273 1,973 267 (138) in millions Cash Flows from Operating Activities: Net earnings Reconciliation of net earnings to net cash provided by operating activities: Depreciation and amortization Stock-based compensation expense Impairment loss Changes in receivables, net Changes in merchandise inventories Changes in other current assets Changes in accounts payable and accrued expenses Changes in deferred revenue Changes in income taxes payable Changes in deferred income taxes Other operating activities Net cash provided by operating activities (769) 2,152 282 247 33 (1,244) (257) 743 80 (42) 26 (103) 13,038 139 (84) (10) 352 128 29 92 420 12,031 (48) 446 99 109 (117) 9,783 (2,442) (1,621) (21) Cash Flows from Investing Activities: Capital expenditures, net of non-cash capital expenditures Payments for businesses acquired, net Proceeds from sales of property and equipment Other investing activities Net cash used in investing activities (1,897) (374) 47 (4) (2,228) 33 14 (2,416) 38 (1,583) Cash Flows from Financing Activities: (Repayments of) proceeds from short-term debt, net Proceeds from long-term debt, net of discounts Repayments of long-term debt Repurchases of common stock Proceeds from sales of common stock Cash dividends Other financing activities Net cash used in financing activities Change in cash and cash equivalents Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year (220) 3,466 (1,209) (9,963) 236 (4,704) (26) (12,420) (1,798) (19) 3,595 1,778 $ 360 4,959 (3,045) (6,880) 218 (3.404) 850 2,991 (543) (8,000) 255 (4,212) (211) (8,870) 933 124 2,538 3,595 (78) (7,870) 330 (8) 2,216 2,538 $ $ $ Supplemental Disclosures: Cash paid for income taxes Cash paid for interest, net of interest capitalized Non-cash capital expenditures 3,774 $ 1,035 248 4,732 $ 991 150 4,623 924 179 Fiscal 2018 includes 53 weeks. Fiscal 2017 and fiscal 2016 include 52 weeks. See accompanying notes to consolidated financial statements. Table of Contents THE HOME DEPOT, INC. CONSOLIDATED BALANCE SHEETS February 3, 2019 January 28, 2018 $ in millions, except per share data Assets Current assets: Cash and cash equivalents Receivables, net Merchandise inventories Other current assets Total current assets Net property and equipment Goodwill Other assets Total assets 1,778 $ 1,936 13,925 890 18,529 22,375 2,252 847 44,003 $ 3,595 1,952 12,748 638 18,933 22,075 2,275 1,246 44,529 $ $ $ Liabilities and Stockholders' Equity Current liabilities: Short-term debt Accounts payable Accrued salaries and related expenses Sales taxes payable Deferred revenue Income taxes payable Current installments of long-term debt Other accrued expenses Total current liabilities Long-term debt, excluding current installments Deferred income taxes Other long-term liabilities Total liabilities 1,339 7,755 1,506 656 1,782 11 1,056 2,611 16,716 26,807 491 1,867 45,881 1,559 7,244 1,640 520 1,805 54 1,202 2,170 16,194 24,267 440 2,174 43,075 89 Common stock, par value $0.05; authorized: 10,000 shares; issued: 1,782 at February 3, 2019 and 1,780 shares at January 28, 2018; outstanding: 1,105 shares at February 3, 2019 and 1,158 shares at January 28, 2018 Paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock, at cost, 677 shares at February 3, 2019 and 622 shares at January 28, 2018 Total stockholders' (deficit) equity Total liabilities and stockholders' equity 89 10,578 46,423 (772) 10,192 39,935 (566) (58,196) (1,878) 44,003 $ (48,196) 1,454 44,529 $ See accompanying notes to consolidated financial statements. Table of Contents THE HOME DEPOT, INC. CONSOLIDATED STATEMENTS OF EARNINGS $ Fiscal 2018 108,203 $ 71,043 37,160 Fiscal 2017 100,904 $ 66,548 34,356 Fiscal 2016 94,595 62,282 32,313 17,864 1,811 17,132 1,754 in millions, except per share data Net sales Cost of sales Gross profit Operating expenses: Selling, general and administrative Depreciation and amortization Impairment loss Total operating expenses Operating income Interest and other income) expense: Interest and investment income Interest expense Other Interest and other, net Earnings before provision for income taxes Provision for income taxes Net earnings 19,513 1,870 247 21,630 15,530 19,675 14,681 18,886 13,427 (36) (74) 1,057 (93) 1,051 16 974 14,556 3,435 11,121 $ 983 13,698 5,068 8,630 972 - 936 12,491 4,534 7,957 $ $ Basic weighted average common shares Basic earnings per share $ 1,137 9.78 $ 1,178 7.33 $ 1,229 6.47 Diluted weighted average common shares Diluted earnings per share 1,143 9.73 $ 1,184 7.29 $ 1,234 6.45 S Fiscal 2018 includes 53 weeks. Fiscal 2017 and fiscal 2016 include 52 weeks. See accompanying notes to consolidated financial statements. Table of Contents THE HOME DEPOT, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Fiscal 2018 Fiscal 2017 Fiscal 2016 $ 11,121 $ 8,630 $ 7,957 311 in millions Net earnings Other comprehensive (loss) income: Foreign currency translation adjustments Cash flow hedges, net of tax Other Total other comprehensive (loss) income Comprehensive income (267) 53 (3) 34 (9) 301 31 (206) 10,915 $ $ 8,931 $ 7,988 Fiscal 2018 includes 53 weeks. Fiscal 2017 and fiscal 2016 include 52 weeks. See accompanying notes to consolidated financial statements. Table of Contents THE HOME DEPOT, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Fiscal 2018 Fiscal 2017 Fiscal 2016 in millions Common Stock: Balance at beginning of year Shares issued under employee stock plans Balance at end of year $ 89 $ 88 $ 88 89 88 10,192 9,347 104 9,787 132 76 Paid-in Capital: Balance at beginning of year Shares issued under employee stock plans Tax effect of stock-based compensation Stock-based compensation expense Balance at end of year 282 273 10,192 97 267 9,787 10,578 35,519 30,973 Retained Earnings: Balance at beginning of year Cumulative effect of accounting change Net earnings Cash dividends Other Balance at end of year 39,935 75 11,121 (4,704) (4) 46,423 8,630 (4,212) 7,957 (3,404) (7) 35,519 (2) 39,935 (898) Accumulated Other Comprehensive Income (Loss): Balance at beginning of year Foreign currency translation adjustments Cash flow hedges, net of tax Other Balance at end of year (566) (267) 53 (867) 311 34 8 (9) (566) (772) (867) Treasury Stock: Balance at beginning of year Repurchases of common stock Balance at end of year Total stockholders' (deficit) equity (48,196) (10,000) (58,196) (1,878) $ (40,194) (8,002) (48,196) 1,454 $ (33,194) (7,000) (40,194) 4,333 $ Fiscal 2018 includes 53 weeks. Fiscal 2017 and fiscal 2016 include 52 weeks. See accompanying notes to consolidated financial statements. Table of Contents THE HOME DEPOT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Fiscal 2018 Fiscal 2017 Fiscal 2016 $ 11,121 $ 8,630 $ 7,957 2,062 273 1,973 267 (138) in millions Cash Flows from Operating Activities: Net earnings Reconciliation of net earnings to net cash provided by operating activities: Depreciation and amortization Stock-based compensation expense Impairment loss Changes in receivables, net Changes in merchandise inventories Changes in other current assets Changes in accounts payable and accrued expenses Changes in deferred revenue Changes in income taxes payable Changes in deferred income taxes Other operating activities Net cash provided by operating activities (769) 2,152 282 247 33 (1,244) (257) 743 80 (42) 26 (103) 13,038 139 (84) (10) 352 128 29 92 420 12,031 (48) 446 99 109 (117) 9,783 (2,442) (1,621) (21) Cash Flows from Investing Activities: Capital expenditures, net of non-cash capital expenditures Payments for businesses acquired, net Proceeds from sales of property and equipment Other investing activities Net cash used in investing activities (1,897) (374) 47 (4) (2,228) 33 14 (2,416) 38 (1,583) Cash Flows from Financing Activities: (Repayments of) proceeds from short-term debt, net Proceeds from long-term debt, net of discounts Repayments of long-term debt Repurchases of common stock Proceeds from sales of common stock Cash dividends Other financing activities Net cash used in financing activities Change in cash and cash equivalents Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year (220) 3,466 (1,209) (9,963) 236 (4,704) (26) (12,420) (1,798) (19) 3,595 1,778 $ 360 4,959 (3,045) (6,880) 218 (3.404) 850 2,991 (543) (8,000) 255 (4,212) (211) (8,870) 933 124 2,538 3,595 (78) (7,870) 330 (8) 2,216 2,538 $ $ $ Supplemental Disclosures: Cash paid for income taxes Cash paid for interest, net of interest capitalized Non-cash capital expenditures 3,774 $ 1,035 248 4,732 $ 991 150 4,623 924 179 Fiscal 2018 includes 53 weeks. Fiscal 2017 and fiscal 2016 include 52 weeks. See accompanying notes to consolidated financial statements