Chapter 5, Problem 5.2ADM

Home Depot: Asset turnover ratio

The Home Depot reported the following data (in millions) in its recent financial statements:

	Year 2	Year 1
Total sales	$83,176	$78,812
Total assets:
Beginning of year	40,518	41,084
End of year	39,946	40,518

A. Determine the asset turnover ratio for Home Depot for Year 2 and Year 1. (Round to two decimal places).

B. What conclusions can be drawn from these ratios concerning the trend in the ability of Home Depot to effectively use its assets to generate sales?