Bundle: Accounting, Chapters 1-13, 26th + Working Papers, Chapters 1-17 For Warren/reeve/duchac's Accounting, 26th And Financial Accounting, 14th + ... For Warren/reeve/duchac's Accounting, 26th
26th Edition
ISBN: 9781337498159
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 1, Problem 1.26EX
Ratio of liabilities to stockholders’ equity
The Home Depot, Inc., is the world’s largest home improvement retailer and one of the largest retailers in the United States based on net sales volume. The Home Depot operates over 2,200 Home Depot® stores that sell a wide assortment of building materials and home improvement and lawn and garden products.
The Home Depot recently reported the following
- a. Determine the total liabilities at the end of Years 2 and 1.
- b. Determine the ratio of liabilities to stockholders’ equity for Year 2 and Year 1. Round to two decimal places.
- c. What conclusions regarding the margin of protection to the creditors can you draw from (b)?
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Ratio of Liabilities to Stockholders' Equity
The Builder's Outlet, is the world's largest home improvement retailer and one of the largest retailers in the United States based on net sales volume. The Builder's Outlet operates
over 2,200 Builder's Outlet stores that sell a wide assortment of building materials and home improvement and lawn and garden products.
Builder's Outlet recently reported the following balance sheet data (in millions):
Year 2
Year 1
Total assets
$49,725
$113,724
Total stockholders' equity
32,500
35,100
a. Determine the total liabilities at the end of Years 2 and 1.
Year 2
million
Year 1
million
Motorola Credit Corporation's annual report:
Net revenue (sales)
Net earnings
Total assets
Total liabilities
Total stockholders' equity
a. Find the total debt to total assets ratio.
Note: Round your answer to the nearest hundredth percent.
Total debt to total assets
Return on equity
b. Find the return on equity ratio.
Note: Round your answer to the nearest hundredth percent.
(dollars in
millions)
$ 297
163
2,175
1,880
295
Asset turnover
c. Find the asset turnover ratio.
Note: Round your answer to the nearest cent.
Profit margin
%
%
%
d. Find the profit margin ratio on net sales.
Note: Round your answer to the nearest hundredth percent.
What does the company report for the following accounts for the most current fiscal year:
Enter your answer in millions.
Total Assets: 70,581
Total Liabilities: 67,282
Long-Term debt: 35,822
Other long-term liabilities: 8,294
Operating Income: 18,278
Interest expense: 1,347
2. The company projects the following for the next fiscal year:
• Total assets will increase by 5%.• Total liabilities will increase by 6%.• Long-term debt and interest expense will increase by 7%.• Operating income will increase by $750 million.
a. Total assets: 74,100
b Total liabilities: 71,319
c. Long-term debt: 38,330
d. operating income: 19,028
e. Interest expense:
Provide the next year’s forecasted balances for the above accounts.
Round your answer to the nearest million.
1. Compute the forecasted debt to equity ratio for the next fiscal year. Round your answer to two decimal places.
2. Compute the forecasted long-term debt to equity ratio for the next fiscal year. Round your answer to two decimal…
Chapter 1 Solutions
Bundle: Accounting, Chapters 1-13, 26th + Working Papers, Chapters 1-17 For Warren/reeve/duchac's Accounting, 26th And Financial Accounting, 14th + ... For Warren/reeve/duchac's Accounting, 26th
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