14th Edition

ISBN: 9781305878907

Author: WARREN

Publisher: Cengage Learning

Concept explainers

Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows fro…

Balance Sheet

A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the …

Financial Statements

Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It…

Owner's Capital

Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expect…

Videos

Textbook Question

Chapter 1, Problem 1.2ADM

Home Depot: 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 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	$40,518	$41,804	$40,518
Total stockholders’ equity	12,522	17,777	17,898

A. Determine the total liabilities at the end of Years 1, 2, and 3.
B. Compute the ratio of liabilities to stockholders’ equity for all three years. (Round to two decimal places.)
C. What conclusions regarding the margin of protection to creditors can you draw from the trend in this ratio for the three years?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 1, Problem 1.1ADM

Chapter 1, Problem 1.3ADM

Students have asked these similar questions

Novak supply company a newly formed corporation , incurred the following expenditures related to the land , to buildings, and to machinery and equipment. abstract company's fee for title search $1,170 architect's fee $7,133 cash paid for land and dilapidated building thereon $195,750 removal of old building $45,000 LESS: salvage $12,375 $32,625 Interest on short term loans during construction…

Year Cash Flow 0 -$ 27,000 1 11,000 2 3 14,000 10,000 What is the NPV for the project if the required return is 10 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. NPV $ 1,873.28 At a required return of 10 percent, should the firm accept this project? No Yes What is the NPV for the project if the required return is 26 percent?

The following were selected from among the transactions completed by Babcock Company during November of the current year: Nov. 3 Purchased merchandise on account from Moonlight Co., list price $85,000, trade discount 25%, terms FOB destination, 2/10, n/30. 4 Sold merchandise for cash, $37,680. The cost of the goods sold was $22,600. 5 Purchased merchandise on account from Papoose Creek Co., $47,500, terms FOB shipping point, 2/10, n/30, with prepaid freight of $810 added to the invoice. 6 Returned merchandise with an invoice amount of $13,500 ($18,000 list price less trade discount of 25%) purchased on November 3 from Moonlight Co. 8 Sold merchandise on account to Quinn Co., $15,600 with terms n/15. The cost of the goods sold was $9,400. 13 Paid Moonlight Co. on account for purchase of November 3, less return of November 6. 14 Sold merchandise with a list price of $236,000 to customers who used VISA and who redeemed $8,000 of pointof- sale coupons. The cost…

Chapter 1 Solutions

CENGAGENOW FOR CORP. FINC

Ch. 1 - Name some users of accounting information.Ch. 1 - Prob. 2DQ Ch. 1 - Prob. 3DQ Ch. 1 - Josh Reilly is the owner of Dispatch Delivery...Ch. 1 - 5. On July 12, Reliable Repair Service extended an...Ch. 1 - Prob. 6DQ Ch. 1 - Describe the difference between an account...Ch. 1 - Prob. 8DQ Ch. 1 - Prob. 9DQ Ch. 1 - The financial statements are interrelated. (A)...

Ch. 1 - Cost principle On June 25, Ritts Roofing extended...Ch. 1 - Prob. 1.2BE Ch. 1 - Transactions Interstate Delivery Service is owned...Ch. 1 - Income statement The revenues and expenses of...Ch. 1 - Prob. 1.5BE Ch. 1 - Balance sheet Using the following data for...Ch. 1 - Statement of cash flows A summary of cash flows...Ch. 1 - Prob. 1.1EX Ch. 1 - Prob. 1.2EX Ch. 1 - Prob. 1.3EX Ch. 1 - Prob. 1.4EX Ch. 1 - Accounting equation The total assets and total...Ch. 1 - Accounting equation Determine the missing amount...Ch. 1 - Prob. 1.7EX Ch. 1 - Asset, liability, and stockholders equity items...Ch. 1 - Effect of transactions on accounting equation What...Ch. 1 - Effect of transactions on accounting equation A. A...Ch. 1 - Prob. 1.11EX Ch. 1 - Transactions The following selected transactions...Ch. 1 - Nature of transactions Teri West operates her own...Ch. 1 - Net income and dividends The income statement for...Ch. 1 - Net income and stockholders equity for four...Ch. 1 - Balance sheet items From the following list of...Ch. 1 - Income statement items From the following list of...Ch. 1 - Prob. 1.18EX Ch. 1 - Prob. 1.19EX Ch. 1 - Prob. 1.20EX Ch. 1 - Balance sheets, net income Financial information...Ch. 1 - Financial statements Each of the following items...Ch. 1 - Prob. 1.23EX Ch. 1 - Prob. 1.24EX Ch. 1 - Financial statements We-Sell Realty, organized as...Ch. 1 - Transactions On September 1 of the current year,...Ch. 1 - Financial statements The amounts of the assets and...Ch. 1 - Financial statements Seth Feye established...Ch. 1 - Transactions; financial statements On August 1,...Ch. 1 - Transactions; financial statements DLite Dry...Ch. 1 - Missing amounts from financial statements The...Ch. 1 - Transactions Amy Austin established an insurance...Ch. 1 - Financial statements The amounts of the assets and...Ch. 1 - Financial statements Jose Loder established Bronco...Ch. 1 - Prob. 1.4BPR Ch. 1 - Transactions; financial statements Bevs Dry...Ch. 1 - Missing amount from financial statements The...Ch. 1 - Peyton Smith enjoys listening to all types of...Ch. 1 - Prob. 1.1ADM Ch. 1 - Home Depot: Ratio of liabilities to stockholders'...Ch. 1 - Lowes: Ratio of liabilities to stockholders equity...Ch. 1 - Prob. 1.4ADM Ch. 1 - Prob. 1.1TIF Ch. 1 - Prob. 1.3TIF

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Solution Summary: The author calculates the total liabilities at the end of the years 2 and 1 for Company THD.

Concept explainers

Videos

Want to see the full answer?

Chapter 1 Solutions