Internet Assignment #4

Debt vs Equity Financing & Analysis of the Equity

Objective: Analyze The Home Depots most recent Annual Report: (https://ir.homedepot.com/~/media/Files/H/HomeDepot-IR/2021_Proxy_Updates/2020_AR_IR_Site_Combined_Document_v3.pdf)

To draw conclusions about (a) components of equity and (b) use of debt vs equity for financing.

1. Analyze Equity:

1. Compare the amounts of Contributed Capital vs Earned Capital.
2. What are the components of contributed capital? Does the company issue preferred or common stock? How many shares are outstanding? What is the amount of par vs Addl Paid- In capital?
3. Did the company pay dividends? If so, how much? Why do companies choose to pay dividends?
4. What is the companys EPS?
5. Did the company repurchase any stock (eg Treasury Stock). If so, how much? Why might a company choose to buy back its own stock?

2. Debt vs Equity Financing:
   1. Compare the companys use of debt vs equity for financing. Provide a brief analysis that includes total dollar amounts for each and draws conclusions about whether the company prefers owner vs non owner financing.
   2. What are the pros vs cons of debt vs equity financing?