Question

ACT 5140 – Accounting for Decision Makers HW #1 Directions: Answer all the questions. Please submit your work in Word or PDF formats only. You can submit an Excel file to support calculations, but please “cut and paste” your solutions into the Word or PDF file. Be sure to show how you did your calculations. Also, please be sure to include your name at the top of the first page of your file. Question #1 • Using the accompanying financial statements (Excel Workbook), assess The Home Depot concerning liquidity, solvency, profitability, and stock performance. For each area, you should calculate the ratios from the “Ratios for Home Depot file “ and provide a brief analysis of the ratios calculated. You do not need to perform vertical analysis for this assignment. I include historical stock price information and outstanding common share information below. You do not need to look beyond the financial statements to complete this assignment. Fiscal Year Ended 2/1/2015 2/2/2014 2/3/2013 1/29/2012 Adjusted Closing Price $103.34 $74.44 $63.87 $41.67 Common Shares Outstanding (millions) 1,307 1,380 1,486 1,523 HOME DEPOT INC $ in millions Year Ending 2/1/2015 2/2/2014 2/3/2013 1/29/2012 OPERATING ACTIVITIES: Net earnings $6,345 $5,385 $4,535 $3,883 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 1,786 1,757 1,684 1,682 Stock-based compensation expense 225 228 218 215 Goodwill impairment (323) 0 97 0 Changes in Assets and Liabilities, net of the effects of acquisition and disposition Receivables, net (81) (15) (143) (170) Merchandise inventories (124) (455) (350) 256 Other current assets (199) (5) 93 159 Accounts payable and accrued expenses 244 605 698 422 Deferred revenue 146 75 121 (29) Income taxes payable 168 119 87 14 Deferred income taxes 159 (31) 107 170 Other long-term liabilities (152) 13 (180) (2) Other 48 (48) 8 51 Net cash provided by operating activities $8,242 $7,628 $6,975 $6,651 INVESTING ACTIVITIES: Capital expenditures (1,442) (1,389) (1,312) (1,221) Proceeds from sales of investments 323 0 0 0 Proceeds from sale of business 0 0 0 101 Payments for business acquired (200) (206) (170) (65) Proceeds from sales of property & equipment 48 88 50 56 Net cash used by investing activities ($1,271) ($1,507) ($1,432) ($1,129) FINANCING ACTIVITIES: Proceeds from short-term borrowings, net 290 0 0 0 Proceeds from long-term borrowings, net of discount 1,981 5,222 0 1,994 Repayments of long-term debt (39) (1,289) (32) (1,028) Repurchases of common stock (7,000) (8,546) (3,984) (3,470) Proceeds from sales of common stock 252 241 784 306 Cash dividends paid to stockholders (2,530) (2,243) (1,743) (1,632) Other financing activities (25) (37) (59) (218) Net cash used by financing activities ($7,071) ($6,652) ($5,034) ($4,048) Change in Cash and Cash Equivalents ($100) ($531) $509 $1,474 Effect of exchange rate changes on cash and cash equivalents (106) (34) (2) (32) Cash and cash equivalents at beginning of year 1,929 2,494 1,987 545 Cash and cash equivalents at end of year $1,723 $1,929 $2,494 $1,987 SUPPLEMENTAL DISCLOSURE OF CASH PAYMENTS MADE FOR Interest, net of capitalized interest $782 $639 $617 $580 Income taxes $3,435 $2,839 $2,482 $1,865 HOME DEPOT INC $ in millions Year Ending 2/1/2015 2/2/2014 2/3/2013 1/29/2012 OPERATING ACTIVITIES: Net earnings $6,345 $5,385 $4,535 $3,883 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 1,786 1,757 1,684 1,682 Stock-based compensation expense 225 228 218 215 Goodwill impairment (323) 0 97 0 Changes in Assets and Liabilities, net of the effects of acquisition and disposition Receivables, net (81) (15) (143) (170) Merchandise inventories (124) (455) (350) 256 Other current assets (199) (5) 93 159 Accounts payable and accrued expenses 244 605 698 422 Deferred revenue 146 75 121 (29) Income taxes payable 168 119 87 14 Deferred income taxes 159 (31) 107 170 Other long-term liabilities (152) 13 (180) (2) Other 48 (48) 8 51 Net cash provided by operating activities $8,242 $7,628 $6,975 $6,651 INVESTING ACTIVITIES: Capital expenditures (1,442) (1,389) (1,312) (1,221) Proceeds from sales of investments 323 0 0 0 Proceeds from sale of business 0 0 0 101 Payments for business acquired (200) (206) (170) (65) Proceeds from sales of property & equipment 48 88 50 56 Net cash used by investing activities ($1,271) ($1,507) ($1,432) ($1,129) FINANCING ACTIVITIES: Proceeds from short-term borrowings, net 290 0 0 0 Proceeds from long-term borrowings, net of discount 1,981 5,222 0 1,994 Repayments of long-term debt (39) (1,289) (32) (1,028) Repurchases of common stock (7,000) (8,546) (3,984) (3,470) Proceeds from sales of common stock 252 241 784 306 Cash dividends paid to stockholders (2,530) (2,243) (1,743) (1,632) Other financing activities (25) (37) (59) (218) Net cash used by financing activities ($7,071) ($6,652) ($5,034) ($4,048) Change in Cash and Cash Equivalents ($100) ($531) $509 $1,474 Effect of exchange rate changes on cash and cash equivalents (106) (34) (2) (32) Cash and cash equivalents at beginning of year 1,929 2,494 1,987 545 Cash and cash equivalents at end of year $1,723 $1,929 $2,494 $1,987 SUPPLEMENTAL DISCLOSURE OF CASH PAYMENTS MADE FOR Interest, net of capitalized interest $782 $639 $617 $580 Income taxes $3,435 $2,839 $2,482 $1,865 HOME DEPOT INC $ in millions Year Ending 2/1/2015 2/2/2014 2/3/2013 1/29/2012 OPERATING ACTIVITIES: Net earnings $6,345 $5,385 $4,535 $3,883 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 1,786 1,757 1,684 1,682 Stock-based compensation expense 225 228 218 215 Goodwill impairment (323) 0 97 0 Changes in Assets and Liabilities, net of the effects of acquisition and disposition Receivables, net (81) (15) (143) (170) Merchandise inventories (124) (455) (350) 256 Other current assets (199) (5) 93 159 Accounts payable and accrued expenses 244 605 698 422 Deferred revenue 146 75 121 (29) Income taxes payable 168 119 87 14 Deferred income taxes 159 (31) 107 170 Other long-term liabilities (152) 13 (180) (2) Other 48 (48) 8 51 Net cash provided by operating activities $8,242 $7,628 $6,975 $6,651 INVESTING ACTIVITIES: Capital expenditures (1,442) (1,389) (1,312) (1,221) Proceeds from sales of investments 323 0 0 0 Proceeds from sale of business 0 0 0 101 Payments for business acquired (200) (206) (170) (65) Proceeds from sales of property & equipment 48 88 50 56 Net cash used by investing activities ($1,271) ($1,507) ($1,432) ($1,129) FINANCING ACTIVITIES: Proceeds from short-term borrowings, net 290 0 0 0 Proceeds from long-term borrowings, net of discount 1,981 5,222 0 1,994 Repayments of long-term debt (39) (1,289) (32) (1,028) Repurchases of common stock (7,000) (8,546) (3,984) (3,470) Proceeds from sales of common stock 252 241 784 306 Cash dividends paid to stockholders (2,530) (2,243) (1,743) (1,632) Other financing activities (25) (37) (59) (218) Net cash used by financing activities ($7,071) ($6,652) ($5,034) ($4,048) Change in Cash and Cash Equivalents ($100) ($531) $509 $1,474 Effect of exchange rate changes on cash and cash equivalents (106) (34) (2) (32) Cash and cash equivalents at beginning of year 1,929 2,494 1,987 545 Cash and cash equivalents at end of year $1,723 $1,929 $2,494 $1,987 SUPPLEMENTAL DISCLOSURE OF CASH PAYMENTS MADE FOR Interest, net of capitalized interest $782 $639 $617 $580 Income taxes $3,435 $2,839 $2,482 $1,865

Answer 1