PROBLEMS PI-19, Analyzing Home Depot (LG 4, 5) Home Depot, Inc, is a leading hom

Question

PROBLEMS PI-19, Analyzing Home Depot (LG 4, 5) Home Depot, Inc, is a leading home improvement store. Listed below are comparative balance sheets and income statements with common-size percents for fiscal 2008 and 2007 (in millions). HOME DEPOT, INC COMPARATIVE COMMON-SIZE BALANCE SHEETs Fiscal 2008 And 2007 ome Depot, inc. S 44 324.0 Total owners' equty 17,777.0 17,714.0 Total labilities and owners' equity 41,164.0 1000% 44.324.0 HOME DEPOT, INC. COMPARATIVE COMMON-SIZE INCOME STATEMENTS Fiscal 2008 And 20017 For Year Ended For Year Ended For Year Ended For Year Ended Feb. 1 Totail revenues71,288o Total expenses $ 69.008 Net income (loss) 100.0 3 26,8%|$ $ 77.349.0 72954.0 REQUIRED Balance sheet questions: 1. Are total assets higher or lower in fiscal 2008 compared to 2007? 2. What is the percent change in total assets from 2007 to 2008? (Hint: For this answer, compute a percent change in total assets from 2007 to 2008). 3. Is the percent of total liabilities to total liabilities owners' equity increasing or decreasing from 2007 to 200S? As a result, does the company have more or less risk? Briefly explain. INCOME STATEMENT QUESTIONS: 4. Are total revenues higher or lower in 2008 compared to 2007? 5. What is the percent change in total revenues from 2007 to 2008? 6. Is the percent of total expenses to total revenues increasing or decreasing from 2007 to 200S? (Hint: For this answer, examine the comparative common size 2007 and 2008 total expense percents for each company). INTEGRATIVE BALANCE SHEET AND INCOME STATEMENT QUESTION: 7. Is the company operating more or less efficiently in 2008 compared to 2007 in terms of total asset investment needed to generate total revenues? Briefly explain. Total assets at the end of 2006 were $52,263.0 million. (Hint: For this answer, you will need to compute total asset turnover ratios for both years).

Explanation / Answer

PI-19 1) Total Asset is lower in fiscal 2008 (41,164) as compared to fiscal 2007($44,324) 2) % change = ($41,164 - $44,324)/$44,324 -7.13% 3) % of Total liabilities / Tt . Liabilities + Shareholder equity 2007 $26,610 /$44,324 60.04% 2008 $23,387/$41,164 56.81% Yes, Percentage is Decreasing The company has less risk as its solvency is improving and obligations has reduced from 2007 to2008. 4) Total Revenues are lower than fiscal 2007. 5) % change = ($71,288-$77,349 )/$77,349 -7.84% 6) Percent of Total Expense to total revenue is Increasing from 94.3% to 98.8% 7) Total Asset Turnover = Revenues/ Average Total Assets 2008 Total Asset Turnover = $71,288/(($41164+44324)/2) 1.67 2009 Total Asset Turnover = $77,349 /(($52263+44324)/2) 1.60 The company has used its asset more effectively in generating revenue in 2008 as compared to 2007

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.