The Home Depot reported the following data (in millions) in its recent financial statements:Year 2Year 1Sales$83,176$78,812Total assets at the end of the yearTotal assets at the beginning of the year39,94640,51840,51841,084a. Determine the asset turnover for The Home Depot for Year 2 and Year 1. Round to twodecimal places.b.What conclusions can be drawn concerning the trend in the ability of TheHome Depot to effectively use its assets to generate sales?

Question
Asked Dec 10, 2019
2 views
The Home Depot reported the following data (in millions) in its recent financial statements:
Year 2
Year 1
Sales
$83,176
$78,812
Total assets at the end of the year
Total assets at the beginning of the year
39,946
40,518
40,518
41,084
a. Determine the asset turnover for The Home Depot for Year 2 and Year 1. Round to two
decimal places.
b.
What conclusions can be drawn concerning the trend in the ability of The
Home Depot to effectively use its assets to generate sales?
help_outline

Image Transcriptionclose

The Home Depot reported the following data (in millions) in its recent financial statements: Year 2 Year 1 Sales $83,176 $78,812 Total assets at the end of the year Total assets at the beginning of the year 39,946 40,518 40,518 41,084 a. Determine the asset turnover for The Home Depot for Year 2 and Year 1. Round to two decimal places. b. What conclusions can be drawn concerning the trend in the ability of The Home Depot to effectively use its assets to generate sales?

fullscreen
check_circle

Expert Answer

Step 1

The asset turnover ratio measures the value of a company's sales or revenue relative to the value of its assets. It is a indicator of how well a company is using its assets to generate income/revenue through its operations. 

 

Step 2

Part a.) The formula for asset turnover ratio is= Total sales divided by the result of  (assets at beginning of year + assets at end of the year)/2

Using the data in the question provided, we shall calculate the asset turno...

help_outline

Image Transcriptionclose

Year 2 Year 1 78812 Total Sales 83176 Total assets at the end of year Total assets at the beginning of year 39946 40518 40518 41084 Asset turnover ratio for home depot for year 1 Total sales / {(Assets at beginning + assets at end of the year)/2} =78812/ {(41084 +40518)/2} 1.93 Asset turnover ratio for home depot for year 2 Total sales / {(Assets at beginning + assets at end of the year)/2} = 83176/{(40518+39946)/2} 2.07

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Accounting Ratio Analysis

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: Stylist Services Co. offers its services to individuals desiring to improve their personal images. A...

A: The closing entries are used to close the nominal account with the help of income summary. The reven...

question_answer

Q: List the errors you find in the following balance sheet. Prepare a corrected balance sheet. Labyrint...

A: Balance sheet of a company is a financial statement prepared by the company. It is prepared to calcu...

question_answer

Q: Splish Brothers Inc. has 10,800 shares of 8%, $100 par value, cumulative preferred stock outstanding...

A: Determine the amount of preferred dividend to be paid each year.

question_answer

Q: The Flapjack Corporation had 7,968 actual direct labor hours at an actual rate of $12.33 per hour. O...

A: Direct labor variances:The difference between the actual labor cost in the production and the standa...

question_answer

Q: After the amount due on a sale of $28,000, terms 2/10, n/eom, is received from a customer within the...

A: (1) Calculate the amount of refund owed to the customer.

question_answer

Q: Kenneth Noll’s gross earnings for the week were $2,600, his federal income tax withholding was $468,...

A: 1.Determine the net pay. 

question_answer

Q: What is the normal balance of the following accounts: (a) Cost of Merchandise Sold, (b) Customer Ref...

A: Click to see the answer

question_answer

Q: If 10,000 pounds of direct materials are purchased for $9,300 on account and the standard cost is $....

A: Computation of Material Price Variance:

question_answer

Q: The debits and credits from two transactions are presented in the following creditor's (supplier's) ...

A:  Posting of transactions: The process of transferring the journalized transactions into the accounts...