CENGAGENOWV2 FOR WARREN'S FINANCIAL & M
13th Edition
ISBN: 9781305267848
Author: Duchac
Publisher: Cengage Learning
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Chapter 1, Problem 1.26EX
Ratio of liabilities to stockholders' equity
The Home Depot, Inc., is the world's largest home improvement retailer and one of the largest retailers in the United States bused on sales volume. The Home Depot operates over 2,200 Home Depot stores that sell a wide assortment of building materials and home improvement and lawn and garden products.
The Home Depot recently reported the following balance sheet data (in millions).
| Year 2 | Year 1 | |
| Total assets | $40,518 | $40,125 |
| Total stockholders' equity | 22,620 | 21,236 |
- a. 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 Year1 Round to two decimal places.
- c. What conclusions regarding the margin of protection to the creditors can you draw from (b)?
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Students have asked these similar questions
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?
Analyze Deere & Company
Deere & Company (DE) manufactures and distributes farm and construction machinery that it sells around the world. In addition to its manufacturing operations, Deere's credit division loans money to customers to finance the purchase of their farm and construction equipment.
The following information is available for three recent years (in millions except per-share amounts):
Year 3
Year 2 Year 1
Net income (loss)
Preferred dividends
$1,523.9 $1,940.0 $3,161.7
$ 0.00
$ 763.7 $ 680.0 $ 664.0
$0.00
$ 0.00
Interest expense
Shares outstanding for computing earnings per share
315
334
363
Cash dividend per share
$ 2.40
$ 2.40
$ 2.22
$ 57,965 $ 59,642 $ 60,429
$ 6,644 $ 7,912 $ 9,667
$ 92.03 $ 81.10 $ 85.58
Average total assets
Average stockholders' equity
Average stock price per share
1. Calculate the following ratios for each year (Round ratios and percentages to one decimal place, except for per-share amounts. Round per-share amounts to two decimal places.):
Year 3…
Ratio of Liabilities to Stockholders' Equity and Ratio of Fixed Assets to Long-Term Liabilities
Recent balance sheet information for two companies in the food industry, Mondelez International, Inc., and The Hershey Company, is as follows (in thousands):
Â
Mondelez
Hershey
Net property, plant, and equipment
$8,482,000
Â
$2,130,294
Â
Current liabilities
16,737,000
Â
2,418,566
Â
Long-term debt
12,532,000
Â
3,254,280
Â
Other long-term liabilities
7,747,000
Â
622,908
Â
Stockholders' equity
25,713,000
Â
1,407,266
Â
a.  Determine the ratio of liabilities to stockholders' equity for both companies. Round your answers to one decimal place.
Mondelez
fill in the blank 1
Hershey
fill in the blank 2
b.  Determine the ratio of fixed assets to long-term liabilities for both companies. Round your answers to one decimal place.
Mondelez
fill in the blank 3
Hershey
fill in the blank 4
c.  Although___________uses more debt, it has____________creditor protection and…
Chapter 1 Solutions
CENGAGENOWV2 FOR WARREN'S FINANCIAL & M
Ch. 1 - Name some users of accounting information.Ch. 1 - Prob. 2DQCh. 1 - Prob. 3DQCh. 1 - Prob. 4DQCh. 1 - On July 12, Reliable Repair Service extended an...Ch. 1 - Prob. 6DQCh. 1 - Describe the difference between an account...Ch. 1 - A business had revenues of 679,000 and operating...Ch. 1 - Prob. 9DQCh. 1 - The financial statements are interrelated. What...
Ch. 1 - Prob. 1.1APECh. 1 - Prob. 1.1BPECh. 1 - Accounting equation Dream-It LLC is a motivational...Ch. 1 - Prob. 1.2BPECh. 1 - Transactions Arrowhead Delivery Service is owned...Ch. 1 - Transactions Interstate Delivery Service is owned...Ch. 1 - Prob. 1.4APECh. 1 - Prob. 1.4BPECh. 1 - Prob. 1.5APECh. 1 - Prob. 1.5BPECh. 1 - Balance sheet Using the following data for Ousel...Ch. 1 - Prob. 1.6BPECh. 1 - Prob. 1.7APECh. 1 - Prob. 1.7BPECh. 1 - Prob. 1.8APECh. 1 - Prob. 1.8BPECh. 1 - Types of businesses The following is a list of...Ch. 1 - Prob. 1.2EXCh. 1 - Prob. 1.3EXCh. 1 - Prob. 1.4EXCh. 1 - Prob. 1.5EXCh. 1 - Prob. 1.6EXCh. 1 - Prob. 1.7EXCh. 1 - Asset, liability, and stockholders equity items...Ch. 1 - Effect of transactions on accounting equation What...Ch. 1 - Effect of transactions on accounting equation A. A...Ch. 1 - Effect of transactions on stockholders equity...Ch. 1 - Transactions The following selected transactions...Ch. 1 - Nature of transactions Teri West operates her own...Ch. 1 - Net income and dividends The income statement for...Ch. 1 - Prob. 1.15EXCh. 1 - Balance sheet items From the following list of...Ch. 1 - Income statement items From the following list of...Ch. 1 - Prob. 1.18EXCh. 1 - Income statement Dairy Services was organized on...Ch. 1 - Missing amounts from balance sheet and income...Ch. 1 - Prob. 1.21EXCh. 1 - Financial statements Each of the following items...Ch. 1 - Statement of cash flows Indicate whether each of...Ch. 1 - Prob. 1.24EXCh. 1 - Prob. 1.25EXCh. 1 - Ratio of liabilities to stockholders' equity The...Ch. 1 - Prob. 1.27EXCh. 1 - Transactions On April 1 of the current year,...Ch. 1 - Financial statements The amounts of the assets and...Ch. 1 - Financial statements Seth Feye established...Ch. 1 - Prob. 1.4APRCh. 1 - Transactions; financial statements DLite Dry...Ch. 1 - Prob. 1.6APRCh. 1 - Transactions Amy Austin established an insurance...Ch. 1 - Prob. 1.2BPRCh. 1 - Financial statements Jose Loder established Bronco...Ch. 1 - Prob. 1.4BPRCh. 1 - Prob. 1.5BPRCh. 1 - Missing amounts from financial statements The...Ch. 1 - Peyton Smith enjoys listening to all types of...Ch. 1 - Prob. 1.1CPCh. 1 - Prob. 1.2CPCh. 1 - Prob. 1.3CPCh. 1 - Prob. 1.6CP
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