The Home Depot reported the following data (in millions) in its financial statements for 2005 and 2004:   2005 2004 Net sales $73,094 $64,816 Total assets at the end of the year 38,907 34,437 Total assets at the beginning of the year 34,437 30,011 a. Determine the ratio of net sales to average total assets for The Home Depot for 2005 and 2004. Round to two decimal places. b. What conclusions can be drawn from these ratios concerning the trend in the ability of The Home Depot to effectively use its assets to generate sales?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The Home Depot reported the following data (in millions) in its financial statements for 2005 and 2004:

 

2005

2004

Net sales

$73,094

$64,816

Total assets at the end of the year

38,907

34,437

Total assets at the beginning of the year

34,437

30,011

a. Determine the ratio of net sales to average total assets for The Home Depot for 2005 and 2004. Round to two decimal places.

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

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