Home Depot: 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 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): Year 3 Year 2 Year 1 Total assets $40,518 $41,804 $40,518 Total stockholders ’ equity 12,522 17,777 17,898 A. Determine the total liabilities 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?

BuyFind

Corporate Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305653535
BuyFind

Corporate Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305653535

Solutions

Chapter
Section
Chapter 1, Problem 1.2ADM
Textbook Problem

Home Depot: 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 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):

Year 3 Year 2 Year 1
Total assets $40,518 $41,804 $40,518
Total stockholders equity 12,522 17,777 17,898
  • A. Determine the total liabilities 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?

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Chapter 1 Solutions

Corporate Financial Accounting
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