Chapter 5 Homework - Rachel L. Gates ACC-240 Chapter 5...

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Rachel L. Gates ACC-240 Chapter 5 Homework Assignment CP5-1 Determining the Accounting Equation Effects of Transactions Transaction Assets Liabilities Stockholders’ Equity (a) + 7,208 NE + 7,208 (Marketing Revenue) (b) + 363 NE + 363 (Contributed Capital) (c) - 1,222 NE - 1,222 (Development Expense) CP5-2 Determining the Effects of Transactions on Debt-to-Assets, Asset Turnover, & Net Profit Margin ratios Transaction Debt-to-Assets Asset Turnover Net Profit Margin (a) - CD + (b) - CD NE (c) + + - S5-1 Finding Financial Information Req. 1. Calculate Debt-to-Asset ratio at Feb 1, 2009 & Feb 3, 2008. Has Home Depot’s financing become > or < risky over these two years? (in millions) [Debt to Asset Ratio] > Total Liabilities / Total Assets (shown as a percentage) Feb 1, 2009 23,387 / 41,164 = 0.568 = 56.8% Feb 3, 2008 26,610 / 44,324 = 0.600 = 60% Home Depot’s financing strategy is less risky in 2009 in comparison to 2008. Req. 2. Calculate Asset Turnover ratio for Feb 2009 & 2008 year ends. Based on these calculations, has Home Depot used its assets > or < efficiently in 2008-2009 than in 2007-2008? (in millions) [Asset Turnover Ratio] > Sales Revenue / Average Total Assets (shown as a decimal) Feb 2008-2009: 71,288 / (41,164 + 44,324)/2 =
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Chapter 5 Homework - Rachel L. Gates ACC-240 Chapter 5...

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