Question

Debt and price-earnings ratios The Home Depot, Inc. (HD) operates over 2,200 home improvement retail stores...

Debt and price-earnings ratios

The Home Depot, Inc. (HD) operates over 2,200 home improvement retail stores and is a competitor of Lowe's (LOW). The following data (in millions) were adapted from recent financial statements of The Home Depot.

Year 2 Year 1
Total assets $39,946 $40,518
Total liabilities 30,624 27,996
Total stockholders’ equity 9,322 12,522
Earnings per share $4.74 $3.78

1. Compute the debt ratio for Years 1 and 2. Round to one decimal place.

Year 2 Year 1
Debt ratio % %

2. Given your answer to part (1), what is the ratio of stockholders' equity to total assets? Round to one decimal place.

Year 2 Year 1
Ratio of stockholders' equity to total assets % %

3. Compute the ratio of liabilities to stockholders' equity. Round to one decimal place.

Year 2 Year 1
Ratio of liabilities to stockholders' equity %

%

4. With a market price of $104.43, compute the price-earnings ratio for Year 2. Round to one decimal place.

5. With a market price of $75.09, compute the price-earnings ratio for Year 1. Round to one decimal place.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1. Compute the debt ratio for Years 1 and 2. Round to one decimal place.

Year 2 Year 1
Debt ratio 30624/39946 = 76.7% 27996/40518 =69.1 %

2. Given your answer to part (1), what is the ratio of stockholders' equity to total assets? Round to one decimal place.

Year 2 Year 1
Ratio of stockholders' equity to total assets 9322/39946 = 23.3% 12522/40518 = 30.9%

3. Compute the ratio of liabilities to stockholders' equity. Round to one decimal place.

Year 2 Year 1
Ratio of liabilities to stockholders' equity 30624/9322 = 328.5%

27996/12522 = 223.6%

4. With a market price of $104.43, compute the price-earnings ratio for Year 2.

Price earning ratio = 104.43/4.74 = 22.0 Times

5. With a market price of $75.09, compute the price-earnings ratio for Year 1.

Price earning ratio = 75.09/3.78 = 19.9 Times

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The Home Depot, Inc. (HD) operates over 2,200 home improvement retail stores and is a competitor...
The Home Depot, Inc. (HD) operates over 2,200 home improvement retail stores and is a competitor of Lowe's (LOW). The following data (in millions) were adapted from recent financial statements of The Home Depot. Year 2 Year 1 Total assets $39,946 $40,518 Total liabilities 30,624 27,996 Total stockholders’ equity 9,322 12,522 Earnings per share $4.74 $3.78 1. Compute the debt ratio for Years 1 and 2. Round to one decimal place. Year 2 Year 1 Debt ratio % % 2....
1. Earnings per Share, Price-Earnings Ratio, Dividend Yield The following information was taken from the financial...
1. Earnings per Share, Price-Earnings Ratio, Dividend Yield The following information was taken from the financial statements of Tolbert Inc. for December 31 of the current fiscal year: Common stock, $45 par value (no change during the year) $8,100,000 Preferred $5 stock, $100 par (no change during the year) 2,000,000 The net income was $424,000 and the declared dividends on the common stock were $45,000 for the current year. The market price of the common stock is $14.40 per share....
Compute ROE and RNOA with Disaggregation Selected balance sheet and income statement information for Home Depot...
Compute ROE and RNOA with Disaggregation Selected balance sheet and income statement information for Home Depot follows. $ millions                               Jan. 31, 2016             Feb. 01, 2015 Operating assets                        $40,333                     $38,223 Nonoperating assets                      2,216                       1,723 Total assets                                   42,549                     39,946 Operating liabilities                       14,918                     13,427 Nonoperating liabilities                 21,315                    17,197 Total liabilities                                36,233                  30,624 Total stockholders' equity                6,316                    9,322 Sales                                              88,519 (NOPBT)       11,774 Nonoperting expense before tax        753 Tax expense                                     4,012 Net income 7,009 Round all answers to two decimal places (ex: 0.12345 = 12.35%)...
Exercise 13-4 Financial Ratios for Debt Management [LO13-4] Comparative financial statements for Weller Corporation, a merchandising...
Exercise 13-4 Financial Ratios for Debt Management [LO13-4] Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 500,000 shares of common stock were outstanding. The interest rate on the bonds, which were sold at their face value, was 10%. The income tax rate was 40% and the dividend per share of common stock was $0.40 this year....
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 23,000 Accounts receivable, net 170,000 Merchandise inventory 350,000 Prepaid expenses 12,000 Total current assets 555,000 Property and equipment, net 850,000 Total assets $ 1,405,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 250,000 Bonds payable, 10% 390,000 Total liabilities 640,000 Stockholders’ equity: Common stock, $5 per value $ 180,000 Retained earnings 585,000 Total stockholders’ equity 765,000 Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 24,000 Accounts receivable, net 210,000 Merchandise inventory 310,000 Prepaid expenses 8,000 Total current assets 552,000 Property and equipment, net 910,000 Total assets $ 1,462,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 210,000 Bonds payable, 12% 300,000 Total liabilities 510,000 Stockholders’ equity: Common stock, $10 par value $ 170,000 Retained earnings 782,000 Total stockholders’ equity 952,000 Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31   Assets   Current assets:      Cash $ 23,000      Accounts receivable, net 200,000      Merchandise inventory 400,000      Prepaid expenses 8,000   Total current assets 631,000   Property and equipment, net 850,000   Total assets $ 1,481,000   Liabilities and Stockholders' Equity   Liabilities:      Current liabilities $ 210,000      Bonds payable, 10% 310,000   Total liabilities 520,000   Stockholders’ equity:      Common stock, $10 par value $ 140,000      Retained earnings 821,000   Total stockholders’ equity 961,000   Total liabilities...
ABC Depot: Asset turnover ratio The ABC Depot reported the following data (in millions) in its...
ABC Depot: Asset turnover ratio The ABC Depot reported the following data (in millions) in its recent financial statements: Year 2 Year 1 Total sales $97,200 $100,520 Total assets: Beginning of year 62,400 67,200 End of year 67,200 76,400 a. Determine the asset turnover ratio for ABC Depot for Year 2 and Year 1. Round to one decimal place. Year 2 Year 1 Asset turnover ratio b. What does an asset turnover ratio indicate? Effectiveness in the use of assets...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31   Assets         Current assets:            Cash   $21,000      Accounts receivable, net    250,000      Merchandise inventory    370,000      Prepaid expenses    12,000        Total current assets    653,000   Property and equipment, net    820,000        Total assets   $1,473,000        Liabilities and Stockholders' Equity         Liabilities:            Current liabilities   $260,000      Bonds payable, 11%    400,000        Total liabilities    660,000   Stockholders’ equity:            Common stock, $10 par value   $150,000      Retained earnings    663,000        Total stockholders’ equity    813,000        Total liabilities and equity   $1,473,000      Castile Products, Inc. Income Statement For the Year...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31   Assets   Current assets:      Cash $ 23,000      Accounts receivable, net 190,000      Merchandise inventory 380,000      Prepaid expenses 12,000   Total current assets 605,000   Property and equipment, net 840,000   Total assets $ 1,445,000   Liabilities and Stockholders' Equity   Liabilities:      Current liabilities $ 220,000      Bonds payable, 10% 320,000   Total liabilities 540,000   Stockholders’ equity:      Common stock, $5 par value $ 140,000      Retained earnings 765,000   Total stockholders’ equity 905,000   Total liabilities...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT