# Home Depot Financial Information Essay

This paper is being prepared to answer given questions related to the 2006 and 2005 Annual Reports for Home Depot. The paper cites the financial statement, page number, chart, where the information is obtained from the annual reports. The formulas used in case of computations are also explained in the text. 2. Questions and Answers: 2. 1. Calculate the percentage change in the current ratio for the years 2005 and 2006. The percentage change in the current ration for years 2005 and 2006 is -13.

1%, which is computed by taking the difference of the current ratio of the two periods and dividing the difference by the current ratio of year 2005. The current ratio is computed by dividing total current assets by total current liabilities which are taken from Consolidate Balance Sheet of 2005 Annual Report on page A-4, as shown bellow: 2. 2. What were the diluted earnings per share for year 2003? The diluted earnings per share is \$1. 88 as taken from Consolidated Statement of Earnings 2005 Annual Report on page A-3. 2. 3.

What is the company policy regarding goodwill? The company’s policy on goodwill is not to amortize the same but it does assess the recoverability

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of goodwill in the third quarter of each fiscal year by determining whether the fair value of each reporting period is supported by its carrying the value. The company estimates the fair values of its identified reporting units using the expected present value of discounted cash flows (Notes for Financial Statements, 2005 Annual Report, page A-11). 2. 4. How many shares of common stock were outstanding at January 29, 2006?

January 30, 2005? The weighted average common share outstanding at January, 29, 2006 and January 30, 2005 respectively are 2,138 and 2,207 as taken from Consolidated Statement of Earnings of 2005 Annual Report on page A-3. 2. 5. Depreciation and amortization expense represented what part of net operating income for 2005. Depreciation and amortization expense represented 13% of net operating income for 2005 with the figures from Consolidated Statement of Earnings of 2005 Annual Report, in page A-3 as shown below:

Percentage is taken by dividing depreciation expense by the amount of operating income for 2005. 2. 6. How much were the dividends per share in 2006? The dividend per share for 2006 was \$0. 388 as taken from Consolidated Statements of Cash Flow of 2005 Annual Report, page A-6. The amount is computed by dividing cash dividends paid by the average outstanding shares as shown below: 2. 7. What is the company debt ratio for the year 2006? The company’s debt to ratio for the year 2006 is 0. 372.

The ratio is taken by dividing total assets with total liabilities for 2006 from the Consolidated Balance Sheet of 2005 Annul Report on page 4 as computed below. 2. 8. What does the Company use for estimating useful lives for Property and Equipment depreciation? The company uses the straight line method for estimating useful lives for Property and Equipment depreciation. Its leasehold improvement, which is part of Property and Equipment are however amortized of depreciated over the term of the lease or the useful life of the improvement, whichever is shorted.

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