Question

Required information

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

a-1. Compute the percentage change relative to the previous year in net sales for the fiscal years ending February 1, 2015, and January 31, 2016.

a-2. Compute the percentage change in net earnings for the fiscal years ending February 1, 2015, and January 31, 2016.

a-3. Compute the gross profit rate for the fiscal years ending February 1, 2015, and January 31, 2016.

a-4. Compute the net income as a percentage of sales for the fiscal years ending February 1, 2015, and January 31, 2016.

a-5. Compute the return on average total assets for the fiscal years ending February 1, 2015, and January 31, 2016.

a-6. Compute the return on average total equity for the fiscal years ending February 1, 2015, and January 31, 2016.

Answer 1

Answer 9-1. Calaulation of percentage change in net sqles for fiscal yervs Feb 1, 201 and Jan 31, 2016 Percentage change in net sqles 15 the ratio of chanse in sqles with previovr year dinidet bi the sples of previous years. - Aevious) year sqles yment Poscentage change in Net sqles 100 Previovs Yeov Sales Percentage chanye in Sqles for Jun 31, 2016 6.42% 88519 - 83176 х 10о : 83176 83)7C - 78812 78812 -X 100= 5.53 % Pachange Chage in sgles for feb.1,2015 a-2 Cglulgtian of porcan tage change n_ Net Egrnings for fiscol yegrs Feb. I, 015 a0d Jan.31, 2016 Per cen tage change in Net Earongs is the ratio of change n net ernings with the pvevious yoar divided by the net egrnings of pveious year. Percen tuge change in (Cyinent - Pvevious) yoar Net Egvnins X 100 Net Egrning previous Year Net Egrnings 7009 - 634 5 : 10.46% Perchage change n Net = Equnings fol Tan 31, 2016 X 100 6345 €345 - 5385 = 17.82% revcentage chang 19 Net = tqunings for Febl, 20) 5 5385 9-3. (glculatjonof Gross Profit Pqbe for fiscal years Feb.l, 2015 gnd Gross Aofit Rate is the atio of gross profit divijed by Net sqles. Gross Pofit Net sqles Gross Potit Ryte 34.19 % 3015 Gross Aofit Rqte for Jan 31,2016 X100 885)9 34.B % Gross Pofjt fate = for Feb. 1,2015 28369 X 100 82)76

9-4. Compytqti0n of Net Income qs q percentage of sqles fod fiia) years Feb. I, 20LS and Tana1,2016 Net Income 9s q percentage of sgles 15 rgtjo of net Mcome divjdel bj the net soles . Net Inrome Net Income as a Percentage of Net sqles Net sales 7003 88519 : 7.31 % Net Income qí a percentage of = Net sgles for Jan.31 , 2016 : 1.62% 6345 Net Income qs a percentage of Net sylei for Feb.I, 2015 33176 9-5 Compyty tjon of Rebun of Nerage totag 95sets for flscgl yegrs Feb I, 2015 91d Jan. 31, 201s Rebym on qverage to tal qssets is the gtio of opevating inrane divided by the querage tobal qvets. Return on Avevage_= Total Asset s Opergting Income Avevage Totyl As spt Return on Aver aye Totyl Assets fov Tan. 3),r01c 11774 * lo0 28.54% (42549 + 39945 2. Rebyin on Avevage Toty) . Arsets fov Feb I, 201 5 10469 X100 = 26.01% 39 946 + 40518 2. a-6 Compytabion of Reburn on Average Total Feb. I 1015 9nd Jan. 31, 201C Return on Avenge Totgl Asseks Is the ratjo of net incme Svjdes by querage stochholder's eqyity for fisal gegrs Eully Retyrn on Avevage Stochholder's EqyIty Net Income Auerage Stochholer's tyyity 1e* Return on Avevage Stock. holler's equity for Jan3,2016 700g 6316 +9312 X 100 = 89.C4% feturn on Average Stork. holNer's Eguity for Febl, 2015 6345 9321 t 12522) 58.09%

The gnswers gre Jgn. 31, reb.I favhicyl 9n5 2016 2015 5.53 %. Percentage chunge in Net Sale 6.42 % Pprcentyge change in Net Egrnings Gross Profile Rgbe 17,82% 10.46 %. 34.19 %. 34. 3%. Net Income qi 9 percen- 7.91% 7.62% tage of sqles Rebyn on Average Tobal ASsets 28.54 %. 26.029 Rebyun on Average stockholderis Eqyity 89,64 % 58.09%