This Comprehensive Problem is to acquaint you with the content of the 2015 financial statements of Home Depot, Inc., and related disclosures, excerpts of which are reproduced in Appendix A of this textbook. (The 2015 financial statements are for the fiscal year ended January 31, 2016.) The problem contains three major parts, which are independent of one another: Part I is designed to familiarize you with the general contents of a companys financial statements; Part II involves analysis of the companys liquidity; and Part III analyzes the trend in its profitability.

If you work this problem as a group assignment, each group member

should be prepared to discuss the groups findings and conclusions in class.

A good starting point for understanding the financial statements of a company such as

Home Depot, Inc., is to understand the accounting policies used in preparing those statements.

The first note accompanying the financial statements provides a brief description of

the major accounting policies the company used. Most of the areas discussed in this note have

been covered in this text.

Part III

As general background study the "Five-Year Summary of Financial and Operating Results."

Instructions:

a. Compute the following for the fiscal years ending January 31, 2016, and February 1, 2015 (round percentages to the nearest tenth of 1 percent):

1. Percentage change in net sales (relative to the prior year).

2. Percentage change in net earnings.

3. Gross profit rate.

4. Net income as a percentage of sales.

5. Return on average total assets.

6. Return on average total equity.

b. Write a statement that describes your conclusion(s) concerning trends in Home Depot's profitability during the period covered in your analysis in part a. above. Justify your conclusion(s).