Using the accompanying financial statements (Excel Workbook), assess The Home Depot concerning profitability, liquidity, solvency, management efficiency, investment return, and stock features. For each area, you should calculate the ratios we discussed in class and provide a brief analysis of the ratios calculated. You do not need to perform vertical analysis for this assignment. I include historical stock price information below. You do not need to look beyond the financial statements to complete this assignment. Fiscal Year Ended 2/2/2014 2/3/2013 1/29/2012 1/30/2011 Adjusted Closing Price $75.97 $65.17 $42.52 $33.77

HOME DEPOT INC $ in millions Year Ending NET SALES Cost of sales GROSS PROFIT Operating Expenses: Selling, General and Administrative Depreciation and Amortization Total Operating Expenses OPERATING INCOME Interest and Other (Income) Expense: Interest and Investment Income Interest Expense Other Interest and Other, net Earnings before income taxes Provision for Income Taxes NET EARNINGS Basic earnings per share Diluted earnings per share Dividends per share # of employees 2/2/2014 2/3/2013 1/29/2012 1/30/2011 $78,812 $74,754 $70,395 $67,997 51,422 48,912 46,133 44,693 27,390 25,842 24,262 23,304 16,597 1,627 18,224 9,166 16,508 1,568 18,076 7,766 16,028 1,573 17,601 6,661 15,849 1,616 17,465 5,839 (12) 711 0 (20) 632 (67) (13) 606 0 (15) 530 51 699 8,467 3,082 $5,385 545 7,221 2,686 $4,535 593 6,068 2,185 $3,883 566 5,273 1,935 $3,338 $3.78 $3.76 $3.03 $3.00 $2.49 $2.47 $2.03 $2.01 $1.560 $1.160 $1.040 $0.945 365,000 340,000 331,000 321,000 HOME DEPOT INC $ in millions As of 2/2/2014 2/3/2013 1/29/2012 1/30/2011 ASSETS Current assets: Cash and cash equivalents Accounts receivable, net Merechandise inventories Other current assets $1,929 1,398 11,057 895 $2,494 1,395 10,710 773 $1,987 1,245 10,325 963 $545 1,085 10,625 1,224 Total Current Assets 15,279 15,372 14,520 13,479 Property & Equipment, at cost Less Accumulated Depreciation and Amortization Net Property & Equipment 39,064 15,716 23,348 38,491 14,422 24,069 38,975 14,527 24,448 38,385 13,325 25,060 1,289 602 $40,518 1,170 473 $41,084 1,120 430 $40,518 1,187 399 $40,125 LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities: Accounts payable Accrued salaries & related expenses Sales taxes payable Deferred revenue Income taxes payable Current installments of long-term debt Other accrued expenses $5,797 1,428 396 1,337 12 33 1,746 $5,376 1,414 472 1,270 22 1,321 1,587 $4,856 1,372 391 1,147 23 30 1,557 $4,717 1,290 368 1,177 13 1,042 1,515 Total current liabilities 10,749 11,462 9,376 10,122 Long-term debt, excluding current installments Other long-term liabilities Deferred income taxes Total liabilities 14,691 2,042 514 27,996 9,475 2,051 319 23,307 10,758 2,146 340 22,620 8,707 2,135 272 21,236 Shareholders equity: Common stock Paid-in capital Retained earnings Accumulated other comprehensive income (loss) Treasury stock, at cost Total shareholders equity 88 8,402 23,180 46 (19,194) 12,522 88 7,948 20,038 397 (10,694) 17,777 87 6,966 17,246 293 (6,694) 17,898 86 6,556 14,995 445 (3,193) 18,889 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $40,518 $41,084 $40,518 $40,125 Goodwill Other assets TOTAL ASSETS HOME DEPOT INC $ in millions Year Ending OPERATING ACTIVITIES: Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization Stock-based compensation expense Goodwill impairment Changes in Assets and Liabilities, net of the effects of acquisition and disposition Receivables, net Merchandise inventories Other current assets Accounts payable and accrued expenses Deferred revenue Income taxes payable Deferred income taxes Other long-term liabilities Other 2/2/2014 2/3/2013 1/29/2012 1/30/2011 $5,385 $4,535 $3,883 $3,338 1,757 228 0 1,684 218 97 1,682 215 0 1,718 214 0 (15) (455) (5) 605 75 119 (31) 13 (48) (143) (350) 93 698 121 87 107 (180) 8 (170) 256 159 422 (29) 14 170 (2) 51 (102) (355) 12 (133) 10 (85) 104 (61) (75) $7,628 $6,975 $6,651 $4,585 (1,389) 0 (206) 88 (1,312) 0 (170) 50 (1,221) 101 (65) 56 (1,096) 0 0 84 Net cash used by investing activities FINANCING ACTIVITIES: Proceeds from long-term borrowings, net of discount Repayments of long-term debt Repurchases of common stock Proceeds from sales of common stock Cash dividends paid to stockholders Other financing activities ($1,507) ($1,432) ($1,129) ($1,012) 5,222 (1,289) (8,546) 241 (2,243) (37) 0 (32) (3,984) 784 (1,743) (59) 1,994 (1,028) (3,470) 306 (1,632) (218) 998 (1,029) (2,608) 104 (1,569) (347) Net cash used by financing activities ($6,652) ($5,034) ($4,048) ($4,451) ($531) (34) $509 (2) $1,474 (32) ($878) 2 Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 2,494 $1,929 1,987 $2,494 545 $1,987 1,421 $545 SUPPLEMENTAL DISCLOSURE OF CASH PAYMENTS MADE FOR Interest, net of capitalized interest Income taxes $639 $2,839 $617 $2,482 $580 $1,865 $579 $2,067 Net cash provided by operating activities INVESTING ACTIVITIES: Capital expenditures Proceeds from sale of business, net Payments for business acquired, net Proceeds from sales of property & equipment Change in Cash and Cash Equivalents Effect of exchange rate changes on cash and cash equivalents Question #1 Using the accompanying financial statements (Excel Workbook), assess The Home Depot concerning profitability, liquidity, solvency, management efficiency, investment return, and stock features. For each area, you should calculate the ratios we discussed in class and provide a brief analysis of the ratios calculated. You do not need to perform vertical analysis for this assignment. I include historical stock price information below. You do not need to look beyond the financial statements to complete this assignment. Fiscal Year Ended 2/2/2014 Adjusted Closing Price $75.97 2/3/2013 $65.17 1/29/201 2 $42.52 1/30/2011 $33.77 Profitability Gross margin % (Gross margin / Sales) Operating margin % (Operating income / Sales) Pre-tax margin % (EBT / Sales) Net profit margin % (Net income / Sales) Earnings per share Basic Diluted Fiscal Year Ended Gross margin % Operating margin % Pre-tax margin % Net profit margin % Earnings per share (basic) Earnings per share (diluted) Analysis 2/2/14 2/3/12 1/29/12 1/30/11 Liquidity Current ratio (CA / CL) Quick ratio (Quick assets / CL) Free cash flow (CFO - PPE Purchases) Fiscal Year Ended 2/2/14 2/3/12 1/29/12 1/30/11 Current ratio Quick ratio Free cash flow Analysis Solvency / Long Term Condition Debt to assets (Long term liab / Assets) Debt to equity (Long term liab / Equity) Interest coverage, sometimes called times interest earned (Operating income / Interest expense) Fiscal Year Ended 2/2/14 Debt to assets Debt to equity Interest coverage Long term liabilities Analysis Management Efficiency 2/3/12 1/29/12 1/30/11 Use of assets Income per employee Revenue per employee Receivable turnover (Rev / Avg A/R) Inventory turnover (COGS / Avg inv) Days to collect (365 / A/R TO) Days to sell (365 / Inv TO) Asset turnover (Rev / Avg total assets) Fiscal Year Ended Income per employee Revenue per employee A/R turnover (times) Inventory turnover (times) Days to collect Days to sell Asset turnover (times) Number of employees (from 10-K report) Average A/R Average inventory Average total assets Analysis Investment Return 2/2/14 2/3/12 1/29/12 1/30/11 Overall assessment Return on equity (Net income / Equity) Return on assets (Net income / Total assets) DuPont analysis for ROA - Net profit margin x Asset turnover Fiscal Year Ended 2/2/14 2/3/12 1/29/12 1/30/11 Return on Equity Return on Assets Net Profit % Asset turnover Average total shareholders equity Average total assets Analysis Stock Features Price-Earnings Dividend yield Dividend payout Fiscal Year Ended P/E Ratio Dividend yield Dividend payout Closing Price 2/2/14 2/3/12 1/29/12 1/30/11 Analysis