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)?

BuyFind

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307
BuyFind

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307

Solutions

Chapter
Section
Chapter 1, Problem 1.26EX
Textbook Problem

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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Chapter 1 Solutions

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