Question

12 Months Ended in Millions $ Home Depot, Ine. Common Size Statement of Enmings Feb. 03, 2019 Jan 28, 2018 Jan. 29, 2017 Feb. 03, 2019 Jan 28, 2018 Jan. 29, 2017 $ 108,203 71,043 37,160 $100,904 66,548 34,356 $ 94,595 62,282 32,313 17,864 1.811 6 Gross proft 7 Operating expenses Seng peneral and a n Deprecation and mortation 10 Impamentos 11 Tooperating expenses 12 Operating income 13 Interest and other income) expense: 14 Interest and investment income 19,513 1,870 247 21,630 15,530 0 17,132 1,754 0 18 886 13,427 19,675 14,681 (93) 1,051 (74) 1,057 0 (36) 972 16 983 26 One 17 Interest and other ne 18 Earnings before provision for income taxes 19 Provision for income tax 20 Net earnings 974 14.556 3,435 $ 11,121 13,698 5,068 $8,630 936 12.491 4.534 $7.957 23 a. Review the vertical analyses and provide major differences over the three years. Discuss patterns that emerge? You should be focusing on specific accounts and not subtotals or totals. 27 D. What are the companys 2 largest major expenses for the current year? 30 C. Discuss the fluctuations in interest expense and income taxes. What are the cause of these changes? 34 d. Was the company more or less profitable when compared to the prior year? What caused the change in income from the prior year?

Answer 1

Home depot, Inc., common size statement of earnings	12 months ended in $ millions	Percent
Feb 03, 2019	Jan 28, 2018	Jan 29, 2017	Feb 03, 2019	Jan 28, 2018	Jan 29, 2017
net sales	108203	100904	94595	100.00%	100.00%	100.00%
cost of sales	71043	66548	62282	65.66%	65.95%	65.84%
gross profit	37160	34356	32313	34.34%	34.05%	34.16%
operating expenses
selling, general and administrative	19513	17864	17132	18.03%	17.70%	18.11%
depreciation and amortization	1870	1811	1754	1.73%	1.79%	1.85%
impairment loss	247	0	0	0.23%	0.00%	0.00%
total operating expenses	21630	19675	18886	19.99%	19.50%	19.97%
operating income	15530	14681	13427	14.35%	14.55%	14.19%
interest and other (income) expense
interest and investment income	-93	-74	-36	-0.09%	-0.07%	-0.04%
interest expense	1051	1057	972	0.97%	1.05%	1.03%
other	16	0	0	0.01%	0.00%	0.00%
interest and other net	974	983	936	0.90%	0.97%	0.99%
earnings before provision for taxes	14556	13698	12491	13.45%	13.58%	13.20%
provision for income tax	3435	5068	4534	3.17%	5.02%	4.79%
net earnings	11121	8630	7957	10.28%	8.55%	8.41%

quiestion a

Cost of goods have remained constant at 65% for all the three periods under review. Selling, general and administrative expenses have been fluctuating. Also, provision for tax have been fluctuating.

question b

Cost of sales and selling, general and administrative expenses are the two major expenses.

question c

The reason could be changes in interest and tax rate

question d

The company is more profitable in 2019. It had increased to 10.28% in 2019 from 8.41% in 2017. The primary reason being increase in revenue and decline in provision for taxation.