Question

gniment ECT Comprehensive Assignment 1 6 Saved Help Save & Exit This Comprehensive Problem is to acquaint you with the content of the 2015 financial statements of Home Depot, Inc. and related disclosures, excerpts of which are reproduced in Appendix A of this textbook. (The 2015 financial statements are for the fiscal year ended January 31, 2016.) The problem contains three major parts, which are independent of one another: Part I is designed to familiarize you with the general contents of a company's financial statements; Part Il involves analysis of the company's liquidity, and Part Il analyzes the trend in its profitability. If you work this problem as a group assignment, each group member should be prepared to discuss the group's findings and conclusions in class. A good starting point for understanding the financial statements of a company such as Home Depot, Inc. , is to understand the accounting policies used in preparing those statements The first note accompanying the financial statements provides a brief description of the major accounting policies the company used. Most of the areas discussed in this note have been covered in this text. Part! Annual reports include not only comparative financial statements but also other sources of information, such as: eBook Print A multiyear summary of financial highlights, a summary of key statistics for the past 5 or 10 years. Several pages of Notes that accompany the financial statements Reports by management and by the independent auditors in which they express their respective responsibilities References for the financial statements. Instructions: Answer each of the following questions and explain where in the statements, notes, or other sections of the annual report you located the information used in your answer. How many years are covered in each of the primary comparative financial statements? Were all of these statements audited? Name the auditors. What were the auditors' conclusions concerning these statements? a. Home Depot, Inc., combines its statement of retained earnings with another financial statement. Where are the b. details about changes in the amountof retained earnings found? Over the three years presented, have the company's annual net cash flows been positive or negative from (1) operating activities, (2) investing activities, and (3) financing activities? Has the company's cash balance increased or decreased during each of these three years? C. Part I Assume that you are the credit manager of a medium-size supplier of building materials and related products. Home

Answer 1

	The three questions are answered by looking into the published annual report of Home Depot Inc for the year 2015.
a	The comparative financial statements are provided for the year ended January 30, 2015. The financial information was presented as on February 1, 2015 and January 31, 2016. The report of independent registered public accounting firm can be found before the consolidated financials. It was given by KPMG LLP. Hence, the auditors are KPMG, LLP. It is also given as a part of management's disclosures.
b	The details of retained earnings have been given as a part of consolidated statement of stockholder's equity. The opening retained earnings were adjusted with cash dividends. This statement is given after the statement of income.
c	On examining the statement of cash flows, it can be ascertained that the cash from operating activities has been consistently positive in all the 3 years. It is in increasing trend. Cash flows from investing activities are negative and outflows increased in 2016, compared with earlier years. Cash flows from financing activities are consistently negative. However, outflows are reducing in 2016, compared with 2014.