Financial & Managerial Accounting
13th Edition
ISBN: 9781285866307
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 1, Problem 1.26EX
Ratio of liabilities to stockholders' equity
The Home Depot, Inc., is the world's largest home improvement retailer and one of the largest retailers in the United States bused on sales volume. The Home Depot 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 the following balance sheet data (in millions).
| Year 2 | Year 1 | |
| Total assets | $40,518 | $40,125 |
| Total stockholders' equity | 22,620 | 21,236 |
- 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 Year1 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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a. Â Determine the total stockholders' equity at the end of Years 2 and 1.
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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).
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$76,200
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11,400
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Fiscal Year 1
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$3,599,419
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$3,423,837
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$3,065,051
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Total stockholders' equity (at end of fiscal year)
1,030,897
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1,010,483
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741,241
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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. Â 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 1Â %
Fiscal Year 2
fill in the blank 2Â %
b.  Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round to one decimal…
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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).
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Net income
$145,600
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$75,000
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Interest expense
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11,200
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Fiscal Year 3
Fiscal Year 2
Fiscal Year 1
Total assets (at end of fiscal year)
$2,273,358
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$2,162,462
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$1,942,300
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Total stockholders' equity (at end of fiscal year)
1,148,875
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1,126,125
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821,927
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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. Â 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 1Â %
Fiscal Year 2
fill in the blank 2Â %
b.  Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round to one decimal…
Chapter 1 Solutions
Financial & Managerial Accounting
Ch. 1 - Name some users of accounting information.Ch. 1 - Prob. 2DQCh. 1 - Prob. 3DQCh. 1 - Prob. 4DQCh. 1 - On July 12, Reliable Repair Service extended an...Ch. 1 - Prob. 6DQCh. 1 - Describe the difference between an account...Ch. 1 - A business had revenues of 679,000 and operating...Ch. 1 - Prob. 9DQCh. 1 - The financial statements are interrelated. What...
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