Home Depot analysis of ratios for 2017&2016, please show the numbers you put in.
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Home Depot analysis of ratios for 2017&2016, please show the numbers you put in. I have done most I just need a help on the remaining. Please do not round. Also amounts are in millions except per share data. Ratios needed: Times interest earned, profit margin, return on total assets, return on common stockholders equity, price-earnings ratio, dividend yield Implications for liquidity, solvency and profitability of company as well as efficiency of management. Does the change in these ratios reflect positivity on the company? THE HOME DEPOT, INC.AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS Current Assets: $2,5382216 1,890 11,809 569 16,484 39,266 17,075 Cash and Cash Equivalents Receivables, net 12,549 Other Current Assets 17,724 40,426 18,512 21,914 Total Curent Assets Property and Equipment, at cost Net Property and Equipment Goodwill Other Assets 2,102 1,235196 $ 42,966S 41,973 Total Assets LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Short-Term Debt Accounts Payable Accrued Salaries and Related Expenses Sales Taxes Payable Deferred Revenue Income Taxes Payable Current Installments of Long-Term Debt Other Accrued Expenses 710350 6.565 1515 476 1-566 7,000 1,669 25 542 2.195 Total Current Liabilities 2:524 Long-Term Debt, excluding current installments Other Long-Term Liabilities Deferred Income Taxes 22.349 1,855 1963 35,657 Total Liabilities STOCKHOLDERS' EQUITY Common Stock, par value $0.05; authorized: 10 billion shares: issued: 1.776 billion shares at January 29, 2017 and 1.772 billion shares at January 31.2016, outstanding 1:203 billion shares at January 29.2017 and 1.252 billion shares at January 31, 2016 Paid-In Capital Retained Earnings 9.787 35,519 (867) 0,973 Treasury Stock, at cost, 573 mittion shares at January 29, 2017 and 520 million shares at Janary 31:2016 (40,194) 4.333 S 42.966 33.194 6316 41 973 Total Stockhofders Eiquity Total Liabilities and Stockholders EquityExplanation / Answer
Times interest earned
=Income before interest expense and income taxes* / Interest expense
= $ 13,463 / $ 972
= 13.85 (Answer)
*Income before interest expense and income taxes = Operating income + Interest and investment income
=$ 13,427 + $ 36
= $ 13,463
(Or you can take earnings before income tax and add Interest expenses)
Profit margin
= Net income / Net sales X 100
= $ 7,957 / $ 94,595 X 100
= 8.41 % or 0.0841 (Answer)
Return on total assets
=Net income / Average total assets*
= $ 7957 / $ $ 42469.5
= 0.19 (Answer)
*Average total assets= (Total assets of current year that is 2017 + Total assets of previous year that is 2016) / 2
= ($ 42966 + $ 41973) / 2
= $ 84939 / 2
= $ 42469.5
Return on common stockholders’ equity
= (Net income – Preferred dividend) / Average common stockholders’ equity*
= ($ 7957- 0) / $ 5324.5
= $ 7957 / $ 5324.5
=1.49 (Answer)
*Average common stockholders’ equity= (Common stockholders’ equity current year 2017 + Common stockholders’ equity previous year 2016) / 2
= ($ 4333 + $ 6316) / 2
= $ 10649 / 2
= $ 5324.5
Price-earnings ratio
=Market price per common share* / Earning per share
=$ 4.48 per share / $ 6.47
= 0.69 (Answer)
*Market price per common share = (Net income- dividend paid to preferred stock)/ Number of common shares outstanding**
= ($ 7957-0) / 1776
=$ 7957 / 1776
= $ 4.48 per share
**Number of common shares outstanding taken from table “Consolidated statement of stockholders’ equity”. This value is as on 29th January 2017.
Dividend yield
=Actual cash dividend per share* / Market price per share
=$ 1.92 / $ 0.69
= 2.78 (Answer)
*Actual cash dividend per share = Total cash dividend to common stockholders’ / Number of common shares outstanding
= $ 3,404 / 1776
=$ 1.92 per share
Note: Total cash dividends to common stockholders’ are taken from “Consolidated statement of cash flows” and Number of common shares outstanding taken from table “Consolidated statement of stockholders’ equity”. This value is as on 29th January 2017.
Implications for liquidity, solvency and profitability of company as well as efficiency of management.
Ratio
Implication
Does the change in these ratios reflect positivity on the company?
Liquidity
It measures a company's current assets against its short-term liabilities.
High Ratio implies –
-Excess of current assets over current liabilities.
- Short term financial strength of business.
- Short term financial soundness.
-Effective utilization of short term or current assets.
Change
-Increase in liquidity ratio will have positive impact on company’s operation.
-Decrease in liquidity ratio will have negative impact on company’s operation.
Solvency
It measures a company's long term assets against its long term liabilities.
High Ratio implies –
-Excess of long term assets over long term liabilities.
- Long term financial strength of business.
- Long term financial soundness and stability.
- Good credibility in the market for raising further loans.
-Long term assets are being utilized effectively that is maximum output with minimum wastage.
Change
-Increase in solvency ratio will have positive impact on company’s operation.
-Decrease in solvency ratio will have negative impact on company’s operation.
Profitability
It measures a company's net profit on sales.
High Ratio implies –
-Low cost of goods sold.
- Control over direct cost, indirect and operating cost.
- Better impact on financial statement.
- Easy to raise additional working capital.
Change
-Increase in Profitability ratio will have positive impact on company’s operation.
-Decrease in Profitability ratio will have negative impact on company’s operation.
Ratio
Implication
Does the change in these ratios reflect positivity on the company?
Liquidity
It measures a company's current assets against its short-term liabilities.
High Ratio implies –
-Excess of current assets over current liabilities.
- Short term financial strength of business.
- Short term financial soundness.
-Effective utilization of short term or current assets.
Change
-Increase in liquidity ratio will have positive impact on company’s operation.
-Decrease in liquidity ratio will have negative impact on company’s operation.
Solvency
It measures a company's long term assets against its long term liabilities.
High Ratio implies –
-Excess of long term assets over long term liabilities.
- Long term financial strength of business.
- Long term financial soundness and stability.
- Good credibility in the market for raising further loans.
-Long term assets are being utilized effectively that is maximum output with minimum wastage.
Change
-Increase in solvency ratio will have positive impact on company’s operation.
-Decrease in solvency ratio will have negative impact on company’s operation.
Profitability
It measures a company's net profit on sales.
High Ratio implies –
-Low cost of goods sold.
- Control over direct cost, indirect and operating cost.
- Better impact on financial statement.
- Easy to raise additional working capital.
Change
-Increase in Profitability ratio will have positive impact on company’s operation.
-Decrease in Profitability ratio will have negative impact on company’s operation.
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