Question

The Home Depot, Inc. operates over 2,200 home improvement retail stores and is a competitor of Lowe’s. The following data (in millions) were adapted from a recent financial statement of The Home Depot.


1. Compute the ratio of liabilities to total assets for Years 1 and 2. Round to one decimal place.
2. Given your answer to part (1), what is the ratio of stockholders’ equity to total assets? Round to one decimal place.
3. Compute the ratio of liabilities to stockholders’ equity. Round to one decimal place.
4. Are Home Depot’s operations financed primarily with liabilities or equity?
5. Comparing Years 1 and 2, should creditors feel more or less safe in Year 2?
6. With a market price of $66.60, compute the price-earnings ratio for Year 2.
7. With a market price of $44.20, compute the price-earnings ratio for Year 1.
8. Compare the results from parts (6) and (7). Comment on any differences.


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  • CreatedMarch 11, 2014
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