Question

The following are the consolidated statement of earnings and the balance sheet of Home Depot, Inc and Subsidiaries.

THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS
	Fiscal Year Ended(1)
amounts in millions, except per share data	January 31, 2016				February 1, 2015				February 2, 2014
NET SALES	$	88,519			$	83,176			$	78,812
Cost of Sales		58,254				54,787				51,897
GROSS PROFIT		30,265				28,389				26,915
Operating Expenses:
Selling, General and Administrative		16,801				16,280				16,122
Depreciation and Amortization		1,690				1,640				1,627
Total Operating Expenses		18,491				17,920				17,749
OPERATING INCOME		11,774				10,469				9,166
Interest and Other (Income) Expense:
Interest and Investment Income		(166	)			(337	)			(12	)
Interest Expense		919				830				711
Interest and Other, net		753				493				699
EARNINGS BEFORE PROVISION FOR INCOME TAXES		11,021				9,976				8,467
Provision for Income Taxes		4,012				3,631				3,082
NET EARNINGS	$	7,009			$	6,345			$	5,385
Weighted Average Common Shares		1,277				1,338				1,425
BASIC EARNINGS PER SHARE	$	5.49			$	4.74			$	3.78
Diluted Weighted Average Common Shares		1,283				1,346				1,434
DILUTED EARNINGS PER SHARE	$	5.46			$	4.71			$	3.76

⁽¹⁾ Fiscal years ended January 31, 2016, February 1, 2015 and February 2, 2014 include 52 weeks.

THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
amounts in millions, except share and per share data	January 31, 2016				February 1, 2015
ASSETS
Current Assets:
Cash and Cash Equivalents	$	2,216			$	1,723
Receivables, net		1,890				1,484
Merchandise Inventories		11,809				11,079
Other Current Assets		1,078				1,016
Total Current Assets		16,993				15,302
Property and Equipment, at cost		39,266				38,513
Less Accumulated Depreciation and Amortization		17,075				15,793
Net Property and Equipment		22,191				22,720
Goodwill		2,102				1,353
Other Assets		1,263				571
Total Assets	$	42,549			$	39,946
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Short-Term Debt	$	350			$	290
Accounts Payable		6,565				5,807
Accrued Salaries and Related Expenses		1,515				1,391
Sales Taxes Payable		476				434
Deferred Revenue		1,566				1,468
Income Taxes Payable		34				35
Current Installments of Long-Term Debt		77				38
Other Accrued Expenses		1,943				1,806
Total Current Liabilities		12,526				11,269
Long-Term Debt, excluding current installments		20,888				16,869
Other Long-Term Liabilities		1,965				1,844
Deferred Income Taxes		854				642
Total Liabilities		36,233				30,624
STOCKHOLDERS’ EQUITY
Common Stock, par value $0.05; authorized: 10 billion shares; issued: 1.772 billion shares at January 31, 2016 and 1.768 billion shares at February 1, 2015; outstanding: 1.252 billion shares at January 31, 2016 and 1.307 billion shares at February 1, 2015		88				88
Paid-In Capital		9,347				8,885
Retained Earnings		30,973				26,995
Accumulated Other Comprehensive Loss		(898	)			(452	)
Treasury Stock, at cost, 520 million shares at January 31, 2016 and 461 million shares at February 1, 2015		(33,194	)			(26,194	)
Total Stockholders’ Equity		6,316				9,322
Total Liabilities and Stockholders’ Equity	$	42,549			$	39,946

Selected information as on February 2, 2014:

Working capital	$	4,530
Cash balance	$	1,929
Total assets	$	40,518
Stockholders' equity	$	12,522

Assume that you are the credit manager of a medium-size supplier of building materials and related products. Home Depot wants to make credit purchases from your company, with payment due in 60 days.

Instructions:

a-1. Compute the current ratio for the fiscal years ending January 31, 2016, and February 1, 2015.

a-2. Compute the quick ratio for the fiscal years ending January 31, 2016, and February 1, 2015.

a-3. Compute the amount of working capital for the fiscal years ending January 31, 2016, and February 1, 2015.

a-4. Compute the percentage change in working capital from the prior year for the fiscal years ending January 31, 2016, and February 1, 2015.

a-5. Compute the percentage change in cash and cash equivalents from the prior year for the fiscal years ending January 31, 2016, and February 1, 2015.

Answer 1

1) Current ratio

Jan,31,2016 = Current assets/Current liabilities

=16993/12526

=1.3566

Feb,1 2015= 15302/11269

=1.3578

2) Quick ratio

  Jan,31,2016 = Current assets-Inventories/Current liabilities

=16993-11809/12526

=.41835

Feb,1 2015= 15302-11079/11269

=.3747

3)Working capital

Jan,31,2016 = Current assets-Current liabilities

=16993-12526

=4467 m$

   Feb,1 2015= 15302-11269

=4033 m$

4)Percentage change in working capital as compared to prior year to current fiscal year

  Jan,31,2016 = Working capital of current year-Working capital of year 2015/Working capital of year 2015

=4467-4033/4033*100

=10.76%

=Working capital of the current year-working capital of the year 2014/Working capital of the year 2014

=4467-4530/4530*100

=-1.39%

Feb,1 2015= Working capital of current year-Working capital of year 2014/Working capital of year 2014

=4033-4530/4530*100

=-10.97%

5)Percentage change in cash and cash equivalents as compared to the prior year

Jan,31,2016 = Cash balance of current year-Cash balance of year 2015/Cash balance of year 2015

=2216-1723/1723*100

=28.16%

= Cash balance of current year-Cash balance of year 2014/Cash balance of year 2014

=2216-1929/1929*100

=14.88%

Feb 1,2015 = Cash balance of current year-Cash balance of year 2014/Cash balance of year 2014

=1723-1929/1929*100

=-10.68%