Question: Value Line Publishing: October 2002 Case How sensitive is return on capital to the forecast assumptions in case Exhibit 8? What independent changes in Carrie

Value Line Publishing: October 2002 Case

How sensitive is return on capital to the forecast assumptions in case Exhibit 8? What independent changes in Carrie Galeotafiores estimates are required to drive the 2002 return-on-capital estimate below Home Depots cost-of-capital estimate of 12.3%? Look specifically at gross margin, cash operating expenses, receivable turnover, inventory turnover, and P&E turnover. What effect does sales growth have on return on capital? Explain your findings.

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