Tim Gillespie Week 3 Financial Project

Tim Gillespie Week 3 Financial Project - 1.6 1.7 1.6...

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Tim Gillespie Home Depot Profitability Ratios My Calcs MSN Calcs Industry Above or Below 1. Profit Margin Net Income / Net Sales 3.17% 3.20% 3.70% Below 2. Return on Assets (Investment) a. Net Income / Total Assets 5.10% 5.40% 6.00% Lower - Resulting in Low Turnover Ratio b. Net Income / Sales x Sales / Total Assets 5.10% 5.40% 6.00% 3. Return on Equity a. Net Income / Stockholders' Equity 12.30% 13% 12.90% Below b. Return on Assets / (1-Debt/Assets) 12.30% 13.00% 12.90% Asset Utilization Ratios 4. Receivables Turnover Sales / Receivables 62.7 63.9 38.20% BAD - this means it takes HD much longer to collect on accounts 5. Average Collection Period AR / Avg Daily Credit Sales 46 NA NA 6. Inventory Turnover Sales / Inventory 4.1 4.2 4.1 Average 7. Fixed Asset Turnover Sales / Fixed Assets 2.3 2.2 2.1 Average 8. Total Asset Turnover Sales / Total Assets
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Unformatted text preview: 1.6 1.7 1.6 Average Liquidity Ratios 9. Current Ratio Current Assets / Current Liabilities 1.2 1.2 1.2 Right on 10. Quick Ratio Current Assets - Inventory / Current Liab. 0.2 0.2 0.2 Right on Debt Utilization Ratios 11. Debt to Total Assets Total Debt / Total Assets 63.22% 64.00% 52.00% Above - HD's Debt to Assets is higher than industry average There are a few differences in the ratios that I calculated versus the ones from MSN Money. A possible reason for this, is they rounded some of their numbers differently. Also, the numbers they used to calulate could be from a previous quarter or year balance sheet, and income statement. Management does not discuss the differences in their ratios such as the recievables turnover being so much different...
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