Use Home Depot's financial information in Appendix A to compute the ROI and EVA for the two most recent years reported. Use Net Earnings as a measure of earnings or returns, and Net Property and Equipment as the invested capital base. Assume the weighted-average cost of capital is 10 percent. Interpret the EVA and ROI numbers. Did these measures improve, or did they decline? Why? 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 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 THE HOME DEPOT, INC. CONSOLIDATED BALANCE SHEETS 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 See accompanying notes to consolidated financial statements. February 3, 2019 January 28, 2018 $ 1,778 $ 3,595 1,936 1,952 13,925 12,748 890 638 18,529 18,933 22,375 22,075 2,252 2,275 847 1,246 $ 44,003 $ 44,529 1,339 1,559 7,755 7,244 1,506 1,640 656 520 1,782 1,805 11 54 1,056 1,202 2,611 2,170 16,716 16,194 26,807 24,267 491 440 1.867 2,174 45,881 43,075 89 89 10,578 46,423 10,192 39,935 (772) (566) (58,196) (48,196) (1.878) 1,454 $ 44,003 $ 44,529 2 Q Search T hulu PRE A-3 in millions, except per share data Appendix A Home Depot 2018 Financial Statements THE HOME DEPOT, INC. CONSOLIDATED STATEMENTS OF EARNINGS 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: Fiscal 2018 Fiscal 2017 Fiscal 2016 108,203 71,043 100,904 66,548 $ 94,595 62,282 37,160 34,356 32,313 19,513 17,864 17,132 1,870 1,811 1,754 247 21,630 19,675 18,886 15,530 14,681 13,427 Interest and investment income (93) (74) (36) Interest expense Other 1,051 1,057 972 16 Interest and other, net 974 983 936 Earnings before provision for income taxes 14,556 13,698 12,491 Provision for income taxes 3,435 5,068 4,534 Net earnings $ 11,121 $ 8,630 $ 7,957 Basic weighted average common shares 1,137 1,178 1,229 Basic earnings per share $ 9.78 $ 7.33 $ 6.47 Diluted weighted average common shares 1,143 1,184 1,234 Diluted earnings per share $ 9.73 $ 7.29 $ 6.45 Fiscal 2018 includes 53 weeks. Fiscal 2017 and fiscal 2016 include 52 weeks. See accompanying notes to consolidated financial statements. Appendix A Home Depot 2018 Financial Statements THE HOME DEPOT, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME A-4 in millions Net earnings Fiscal 2018 $ 11,121 Fiscal 2017 8,630 Fiscal 2016 7,957 Other comprehensive (loss) income: Foreign currency translation adjustments (267) 311 (3) Cash flow hedges, net of tax Other Total other comprehensive (loss) income Comprehensive income 53 (1) 34 8 (9) (206) 301 31 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. in millions Common Stock: Balance at beginning of year Shares issued under employee stock plans Balance at end of year Paid-in Capital: STATEMENTS OF STOCKHOLDERS' EQUITY Fiscal 2018 Fiscal 2017 Fiscal 2016 89 $ 88 $ 88 1 89 89 88 Balance at beginning of year 10,192 Shares issued under employee stock plans 104 Tax effect of stock-based compensation Stock-based compensation expense Balance at end of year 9,787 9,347 132 76 97 282 273 267 10,578 10,192 9,787 Retained Earnings: Balance at beginning of year 39,935 35,519 30,973 Cumulative effect of accounting change 75 Net earnings 11,121 8,630 7,957 Cash dividends (4.704) (4.212) (3,404) Other (4) (2) (7) Balance at end of year 46,423 39,935 35,519 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 Treasury Stock: Balance at beginning of year Repurchases of common stock (566) (867) (898) (267) 311 (3) 53 (1) 34 8 (9) (772) (566) (867) (48,196) (40,194) (33,194) (10,000) (8,002) (7,000) Balance at end of year (58,196) (48,196) (40,194) Total stockholders' (deficit) equity $ (1,878) $ 1,454 $ 4,333 Fiscal 2018 includes 53 weeks. Fiscal 2017 and fiscal 2016 include 52 weeks. See accompanying notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS in millions Cash Flows from Operating Activities: Fiscal 2018 Fiscal 2017 Fiscal 2016 Net earnings Reconciliation of net earnings to net cash provided by operating activities: $ 11,121 8,630 $ 7,957 Depreciation and amortization 2,152 2,062 1,973 Stock-based compensation expense 282 273 267 Impairment loss 247 Changes in receivables, net 33 139 (138) Changes in merchandise inventories (1.244) (84) (769) Changes in other current assets (257) (10) (48) Changes in accounts payable and accrued expenses 743 352 446 Changes in deferred revenue 80 128 99 Changes in income taxes payable (42) 29 109 Changes in deferred income taxes 26 92 (117) Other operating activities (103) 420 4 Net cash provided by operating activities 13,038 12,031 9,783 Cash Flows from Investing Activities: Capital expenditures, net of non-cash capital expenditures (2,442) (1,897) (1,621) Payments for businesses acquired, net (21) (374) Proceeds from sales of property and equipment 33 47 38 Other investing activities 14 (4) Net cash used in investing activities (2,416) (2,228) (1,583) Cash Flows from Financing Activities: (Repayments of) proceeds from short-term debt, net (220) 850 360 Proceeds from long-term debt, net of discounts 3,466 2,991 4,959 Repayments of long-term debt (1,209) (543) (3,045) Repurchases of common stock (9.963) (8.000) (6,880) Proceeds from sales of common stock 236 255 218 Cash dividends Other financing activities (4.704) (4.212) (3.404) Net cash used in financing activities (26) (12,420) (211) (8,870) (78) (7,870) Change in cash and cash equivalents (1,798) 933 330 Effect of exchange rate changes on cash and cash equivalents (19) 124 (8) Cash and cash equivalents at beginning of year 3,595 2,538 2,216 Cash and cash equivalents at end of year $ 1,778 $ 3,595 $ 2,538 Supplemental Disclosures: Cash paid for income taxes $ 3,774 4,732 $ 4,623 Cash paid for interest, net of interest capitalized 1,035 991 924 Non-cash capital expenditures 248 150 179 Q Search PRE hulu