Compute the ratio of liabilities to stockholders equity

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Reference no: EM132748264

Problem - Analyze the Home Depot for three years

The Home Depot, Inc. (HD), is the world's largest home improvement retailer and one of the largest retailers in the United States based on sales volume. Home Depot operates over 2,200 stores that sell a wide assortment of building, home improvement, and lawn and garden items.

Home Depot recently reported the following end-of-year balance sheet data (in millions):

 

Year 3

Year 2

Year 1

Total assets

$42,549

$39,946

$40,518

Total liabilities

36,233

30,624

27,996

Total stockholders' equity

6,316

9,322

12,522

Required -

a. Compute the ratio of liabilities to stockholders' equity for all three years. Round to two decimal places.

b. What conclusions regarding the margin of protection to creditors can you draw from the trend in this ratio for the three years?

Reference no: EM132748264

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