For each question, you will be using the SEC’s EDGAR database (www.sec.gov) to a

Question

For each question, you will be using the SEC’s EDGAR database (www.sec.gov) to access companies’ financial statements and related disclosure notes (10-Ks).

https://www.sec.gov/Archives/edgar/data/354950/000035495017000005/hd-01292017x10xk.htm (INFO IN LINK)

HOME DEPOT INC—fiscal year ended January 31, 2017

1.What inventory method(s) does the company use to value its inventory?

2.How does the company ensure that amounts reflected in the consolidated financial statements for Merchandise Inventories are properly stated?

3. Calculate the company’s inventory turnover ratio for the fiscal year ended January 31, 2017.

Explanation / Answer

Solution:-

1.What inventory method(s) does the company use to value its inventory:-

Company's Merchandise Inventories are stated at the lower of cost (first-in, first-out) or market, with approximately 70% valued under the retail inventory method and the remainder under a cost method.

2.How does the company ensure that amounts reflected in the consolidated financial statements for Merchandise Inventories are properly stated:-

Independent physical inventory counts or cycle counts are taken on a regular basis in each store and distribution center to ensure that amounts reflected in the accompanying Consolidated Financial Statements for Merchandise Inventories are properly stated.

3. Calculate the company’s inventory turnover ratio for the fiscal year ended January 31, 2017:-

Inventory turnover ratio was 4.9 times at the end of both fiscal 2016 and 2015.

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