The Home Depot is the world's largest home improvement retailer and one of the largestretailers in the United States based on net sales volume. The Home Depot operates over2,200 Home Depot® stores that sell a wide assortment of building materials and homeimprovement and lawn and garden products.The Home Depot recently reported the following balance sheet data (in millions)Year 2Year 1Total assets$39,946$40,518Total stockholders' equity12,5229,322a. Determine the total liabilities at the end of Years 2 and 1.b. Determine the ratio of liabilities to stockholders' equity for Year 2 and Year 1. Roundto two decimal placesWhat conclusions regarding the margin of protection to the creditors can youC.draw from (b)?

Answered: The Home Depot is the world's largest…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Smart Eletro plc, a public listed company, is a major supplier of electrical components to the automotive industry. Company’s key accounting ratios are set out in the following table, together with industry averages: Smart Electro plc. Industry Averages Return on capital employed 21.4% 16.1% Gross profit margin 11.5% 13.0% Net profit margin 9.8% 11.0% Current ratio 1.6 1.4 Inventories turnover 12 6 Trade receivables collection period 61 days 65 days Trade payables payment period 43 days 105 days Gearing 68.4% 37.2% Questions: You are working in this company and the Finance Director asked you to write a report to the Board of Directors. Write a brief report to the board of directors of Smart Eletro plc. comparing the ratios for the company with the industry averages. Identify any areas in which you think they could make improvements. Smart Eletro plc. has operations in…
Inferring Transactions from Financial StatementsCostco Wholesale Corporation operates membership warehouses selling food, appliances, consumer electronics, apparel and other household goods at 721locations across the U.S. as well as in Canada, the United Kingdom, Japan, Australia, South Korea, Taiwan, Mexico and Puerto Rico. As of its fiscal year-end 2016, Costco had approximately 86.7 million members. Selected fiscal-year information from the company's balance sheets follows. Selected Balance Sheet Data ($ millions) 2016 2015 Merchandise inventories $8,969 $8,908 Deferred membership income (liability) 1,362 1,269 (a) During fiscal 2016, Costco collected $2,739 million cash for membership fees. Use the financial statement effects template to record the cash collected for membership fees.(b) Costco recorded merchandise costs (that is, cost of goods sold) of $102,901 million in 2016. Record this transaction in the financial statement effects template.(c) Determine the…
Financial Accounting C.Mulford: Financial Statement Analysis: 35 Using DuPont Analysis to Compare Corporate Performance Exercise Using Data for Thiokol Corp. and Wyman-Gordon, Inc. Use the data provided below to compare financial performance for the two companies (amounts in millions). Thiokol $ 889.5 Wyman-Gordon $ 499.6 Sales Net income $ 51.4 $ 25.2 Total assets $ 818.3 $ 375.9 Shareholders' equity $ 447.9 $ 109.9 Using DuPont Analysis we see that, Thiokol Corp.: Return on equity Net income Sales Total assets X X Sales Total assets Shareholders' equity Financial leverage. (debt multiplier) Net margin X Asset turnover X (asset multiplier) Return on equity X
The following information is taken from the financial statements of Down Home Deli for the last three years. The owner, John Walton is quite pleased to see that his sales are growing steadily. 2018 2017 2016 Sales $ 61,500 $ 50,400 $ 42,000 Cost of goods sold 27,670 21,170 16,800 Operating income 7,530 6,050 4,620 Net income 3,075 4,030 2,940 Instructions: (a) Calculate gross profit margin, profit margin, and profit margin using operating income. (b) Comment on whether the Deli is, in fact, doing better over the three years as John believes.
Amazon.com, inc. is one of the largest Internet retailers in the world. Wal-Mart is the largest retailer in the United States. Amazon and Wal-Mart compete in similar markets; however, Wal-Mart sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. Earnings and Common Stock Outstanding information was obtained from recent financial statements for both companies as follows (in million): Amazon . Wal-Mart Net Income $2,371 $14,694 Average Number of Common Shares Outstanding. . $ 474 $ 3,207 Required: a. Determine the Earnings Per Share for each company. Neither company had Preferred Stock Outstanding. Round to the nearest cent. b. Which company appears more profitable from an Earnings-Per-Share perspective. c. The market price of Amazon Common Stock was $750 per share at a time when Wal-Mart's was $69 per share. How would you explain this difference in Market Price given the Earnings-Per-Share computed in (a) for both companies?
The Home Depot, Inc. (HD), is the world's largest home improvement retailer and one of the largest retailers in the United States based on sales volume. Home Depot operates over 2,200 stores that sell a wide assortment of building, home improvement, and lawn and garden items. Home Depot recently reported the following end-of-year balance sheet data (in millions): Year 3 Year 2 Year 1 Total assets $42,549 $39,946 $40,518 Total liabilities 36,233 30,624 27,996 Total stockholders' equity 6,316 9,322 12,522 Compute the ratio of liabilities to stockholders' equity for all three years. Round to two dec- imal places. a. b. What conclusions regarding the margin of protection to creditors can you draw from the trend in this ratio for the three years?
Below is the common-sized statement for the current calendar year fo Hugo Boss and Industry average, Industry Hugo Boss Average Sales 100% 100% Cost of Goods Sold 46.7% 45.2% Gross Profit 53.3% 54.8% Selling Expenses 12.9% 16.7% Administrative Expenses 13.1% 14.5% Total Operating Expenses 25.0% 31.2% Income from Operations 27.3% 23.6% Other Revenue 1.8% 1.2% 29.% 24.8% Other Expense(Interest) 1.0 0.9 Income Before Income Tax 28.1% 23.9% Income Tax Expense 9.8 8.4 Net Income 18.3% 15.5% Using the common-sized statement above, compare Hugo Boss with the industry average and identify strengths and weaknesses that Hugo Boss has to the industry. Does Hugo Boss need any course correction. What does it need?
Rotorua Products sells agricultural products in the burgeoning Asian market. The company's current assets, current liabilities, and sales over the last five years (Year 5 is the most recent year) are as follows: Sales Cash Accounts receivable, net Inventory Total current assets Current liabilities Sales Current assets: Cash Accounts receivable, net Inventory Total current assets Current liabilities Year 11 Year 2 Year 3 Year 4 Year 5 $4,545,400 $4,737,850 $ 5,126,380 $5,421,900 $5,776,190 Year 1 $ 88,854 418,283 800,380 $ 1,307,517 $ 313,578 Required: 1. Express all of the asset, liability, and sales data in trend percentages. Use Year 1 as the base year. Note: Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3). % % % % % % Year 2 $ 88,845 $ 77,057 435,833 587,279 $ 90,380 417,076 876,061 $1,383,517 $ 1,350,248 $ 1,466,414 $1,552,502 $ 346,822 $ 336,685 $ 335,107 $ 390,612 825,570 882,078 % % % % % % Year 3 % % % % Year 4 % % $ 80,928 569,984…
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Chipotle Mexican Grill began with a single location in 1993 and now operates more than 2,450 restaurants. Adapted versions of the company's income statements (in $000s) are as follows: 2017 2016 Revenue $4476,412 $3,904.384 Restaurant operating costs Food, beverage, and packaging 1.535.428 1,365,580 Labor 1,205,992 1.105,001 Occupancy 327,132 293,636 Other operating costs 651.644 641.953 General and administrative expenses 296,388 276,240 Depreciation and amortization 163,348 146,368 Pre-opening costs 12,341 17,162 Loss on disposal of assets 13,345 23,877 Total operating expenses 4,205,618 3,869,817 Income from operations 270,794 34,567 Interest and other income (expense), net 4,949 4,172 Income before income taxes 275,743 38,739 Provision for income taxes 99,490 15,801 Net income $176,253 $22,938 Prepare a common-size income statement for each year. (Round answers to 1 decimal place, e.g. 50.1%.) 2017 2016 Revenue Restaurant operating costs Food, beverage, and packaging Labor…
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