Ratio of liabilities to
The Home Depot is the world's largest home improvement retailer and one of the largest retailers in the United States based on net sales volume. The Home De pot operates over 2,200 Home Depot® stores that sell a wide assortment of building materials and home improvement and lawn and garden products.
The Home Depot recently reported tl1e following balance sheet data (in millions):
Year2 | Year1 | |
Total assets | $39,946 | $40,518 |
Total stockholders' equity | 9,322 | 12,522 |
a. Determine the total liabilities at the end of Years 2 and 1.
b. Determine the ratio of liabilities to stockholders' equity for Year 2 and Year 1. Round to two decimal places.
c. What conclusions regarding the margin of protection to the creditors can you draw from (b)?
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Chapter 1 Solutions
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- Analyze The Home Depot for three years The Home Depot, Inc. (HD), is the worlds largest home improvement retailer and one of the largest retailers in the United States based on sales volume. Home Depot operates over 2,200 stores that sell a wide assortment of building, home improvement, and lawn and garden items. Home Depot recently reported the following end-of-year balance sheet data (in millions): a. Compute the ratio of liabilities to stockholders equity for all three years. Round to two decimal places. b. What conclusions regarding the margin of protection to creditors can you draw from the trend in this ratio for the three years?arrow_forwardLowes: Ratio of liabilities to stockholders equity Lowes Companies, Inc., a major competitor to The Home Depot in the home improvement retail business, operates over 1,800 stores. Lowe's recently reported the following end-of-year balance sheet data (in millions): Year 3 Year 2 Year 1 Total assets 32,732 32,666 33,559 Total liabilities 20,879 18,809 17,026 A. Determine the total stockholders equity at the end of Years 1, 2, and 3. B. Compute the ratio of liabilities to stockholders equity for all three years. (Round to two decimal places.) C. What conclusions regarding the margin of protection to creditors can you draw from the trend in this ratio for the three years? D. Using the balance sheet data for Home Depot in ADM-2, how does Lowes ratio of liabilities to stockholders equity compare to that of Home Depot?arrow_forwardReturn on assets Tiffany & Co. (TIF) designs and sells jewelry including rings, watches, and necklaces throughout the world. The folk wing data (in millions) n taken from recent financial statements of Tiffany: Compute the return on assets for Tiffany using the preceding data. Round to one decimal place.arrow_forward
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- Profitability Ratios East Point Retail, Inc., sells professional women's apparel through company-owned retail stores. Recent financial information for East Point is provided below (all numbers in thousands). Fiscal Year 3 Fiscal Year 2 Net income $148,000 $76,200 Interest expense 3,000 11,400 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $3,599,419 $3,423,837 $3,065,051 Total stockholders' equity (at end of fiscal year) 1,030,897 1,010,483 741,241 Assume the apparel industry average return on total assets is 8.0%, and the average return on stockholders’ equity is 15.0% for the year ended April 2, Year 3. a. Determine the return on total assets for East Point for fiscal Years 2 and 3. Round to one decimal place. Fiscal Year 3 fill in the blank 1 % Fiscal Year 2 fill in the blank 2 % b. Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round to one decimal…arrow_forwardProfitability Ratios East Point Retail, Inc. sells apparel through company-owned retail stores. Recent financial information for East Point follows (in thousands): Fiscal Year 3 Fiscal Year 2 Net income (loss) $151,500 $(78,000) Interest expense 3,100 11,700 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $1,553,578 $1,477,794 $1,325,332 Total stockholders' equity (at end of fiscal year) 1,186,163 1,162,675 863,299 Assume the apparel industry average return on total assets is 5.0% and the average return on stockholders' equity is 8.0% for the year ended February 2, Year 3. a. Determine the return on total assets for East Point for fiscal Years 2 and 3. Round percentages to one decimal place. If required, use a minus sign to indicate a negative return on total assets. Fiscal Year 3 % Fiscal Year 2 % b. Determine the return on stockholders’ equity for East Point for…arrow_forwardProfitability Ratios East Point Retail, Inc., sells professional women's apparel through company-owned retail stores. Recent financial information for East Point is provided below (all numbers in thousands). Fiscal Year 3 Fiscal Year 2 Net income $145,600 $75,000 Interest expense 3,000 11,200 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $2,273,358 $2,162,462 $1,942,300 Total stockholders' equity (at end of fiscal year) 1,148,875 1,126,125 821,927 Assume the apparel industry average return on total assets is 8.0%, and the average return on stockholders’ equity is 15.0% for the year ended April 2, Year 3. a. Determine the return on total assets for East Point for fiscal Years 2 and 3. Round to one decimal place. Fiscal Year 3 fill in the blank 1 % Fiscal Year 2 fill in the blank 2 % b. Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round to one decimal…arrow_forward
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