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Home Depot Inc. (HD) | Short-term (Operating) Activity Analysis

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Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.


Ratios (Summary)

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Home Depot Inc., short-term (operating) activity ratios

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    Jan 29, 2012 Jan 30, 2011 Jan 31, 2010 Feb 1, 2009 Feb 3, 2008 Jan 28, 2007
  Turnover Ratios
chart Inventory turnover
chart Receivables turnover
chart Payables turnover
chart Working capital turnover
  Average No. of Days
chart Average inventory processing period
chart Add: Average receivable collection period
chart Operating cycle
chart Less: Average payables payment period
chart Cash conversion cycle

Source: Based on data from Home Depot Inc. Annual Reports

Ratio Description The company
Inventory turnover An activity ratio calculated as revenue divided by inventory. Home Depot Inc.'s inventory turnover deteriorated from 2010 to 2011 but then improved from 2011 to 2012 exceeding 2010 level.
Receivables turnover An activity ratio equal to revenue divided by receivables. Home Depot Inc.'s receivables turnover deteriorated from 2010 to 2011 and from 2011 to 2012.
Payables turnover An activity ratio calculated as revenue divided by payables. Home Depot Inc.'s payables turnover increased from 2010 to 2011 and from 2011 to 2012.
Working capital turnover An activity ratio calculated as revenue divided by working capital. Home Depot Inc.'s working capital turnover deteriorated from 2010 to 2011 but then improved from 2011 to 2012 not reaching 2010 level.
Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period. Home Depot Inc.'s average inventory processing period deteriorated from 2010 to 2011 but then improved from 2011 to 2012 exceeding 2010 level.
Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnoverd. Home Depot Inc.'s average receivable collection period deteriorated from 2010 to 2011 and from 2011 to 2012.
Operating cycle Equal to average inventory processing period plus average receivables collection period. Home Depot Inc.'s operating cycle deteriorated from 2010 to 2011 but then improved from 2011 to 2012 exceeding 2010 level.
Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. Home Depot Inc.'s average payables payment period declined from 2010 to 2011 and from 2011 to 2012.
Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. Home Depot Inc.'s cash conversion cycle deteriorated from 2010 to 2011 but then improved from 2011 to 2012 not reaching 2010 level.

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Inventory Turnover

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    Jan 29, 2012 Jan 30, 2011 Jan 31, 2010 Feb 1, 2009 Feb 3, 2008 Jan 28, 2007
  Selected Financial Data (USD $ in millions)
chart Net sales
chart Merchandise inventories
  Inventory Turnover, Comparison to Industry
chart Home Depot Inc.1
  Industry, Consumer Services

Source: Based on data from Home Depot Inc. Annual Reports

2012 Calculations

1 Inventory turnover = Net sales ÷ Merchandise inventories
= ÷ =

Ratio Description The company
Inventory turnover An activity ratio calculated as revenue divided by inventory. Home Depot Inc.'s inventory turnover deteriorated from 2010 to 2011 but then improved from 2011 to 2012 exceeding 2010 level.

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Receivables Turnover

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    Jan 29, 2012 Jan 30, 2011 Jan 31, 2010 Feb 1, 2009 Feb 3, 2008 Jan 28, 2007
  Selected Financial Data (USD $ in millions)
chart Net sales
chart Receivables, net
  Receivables Turnover, Comparison to Industry
chart Home Depot Inc.1
  Industry, Consumer Services

Source: Based on data from Home Depot Inc. Annual Reports

2012 Calculations

1 Receivables turnover = Net sales ÷ Receivables, net
= ÷ =

Ratio Description The company
Receivables turnover An activity ratio equal to revenue divided by receivables. Home Depot Inc.'s receivables turnover deteriorated from 2010 to 2011 and from 2011 to 2012.

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Payables Turnover

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    Jan 29, 2012 Jan 30, 2011 Jan 31, 2010 Feb 1, 2009 Feb 3, 2008 Jan 28, 2007
  Selected Financial Data (USD $ in millions)
chart Net sales
chart Accounts payable
  Payables Turnover, Comparison to Industry
chart Home Depot Inc.1
  Industry, Consumer Services

Source: Based on data from Home Depot Inc. Annual Reports

2012 Calculations

1 Payables turnover = Net sales ÷ Accounts payable
= ÷ =

Ratio Description The company
Payables turnover An activity ratio calculated as revenue divided by payables. Home Depot Inc.'s payables turnover increased from 2010 to 2011 and from 2011 to 2012.

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Working Capital Turnover

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    Jan 29, 2012 Jan 30, 2011 Jan 31, 2010 Feb 1, 2009 Feb 3, 2008 Jan 28, 2007
  Selected Financial Data (USD $ in millions)
chart Net sales
chart Working capital
  Working Capital Turnover, Comparison to Industry
chart Home Depot Inc.1
  Industry, Consumer Services

Source: Based on data from Home Depot Inc. Annual Reports

2012 Calculations

1 Working capital turnover = Net sales ÷ Working capital
= ÷ =

Ratio Description The company
Working capital turnover An activity ratio calculated as revenue divided by working capital. Home Depot Inc.'s working capital turnover deteriorated from 2010 to 2011 but then improved from 2011 to 2012 not reaching 2010 level.

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Average Inventory Processing Period

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    Jan 29, 2012 Jan 30, 2011 Jan 31, 2010 Feb 1, 2009 Feb 3, 2008 Jan 28, 2007
  Selected Financial Data
chart Inventory turnover
  Average Inventory Processing Period (no. of days), Comparison to Industry
chart Home Depot Inc.1
  Industry, Consumer Services

Source: Based on data from Home Depot Inc. Annual Reports

2012 Calculations

1 Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =

Ratio Description The company
Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period. Home Depot Inc.'s average inventory processing period deteriorated from 2010 to 2011 but then improved from 2011 to 2012 exceeding 2010 level.

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Average Receivable Collection Period

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    Jan 29, 2012 Jan 30, 2011 Jan 31, 2010 Feb 1, 2009 Feb 3, 2008 Jan 28, 2007
  Selected Financial Data
chart Receivables turnover
  Average Receivable Collection Period (no. of days), Comparison to Industry
chart Home Depot Inc.1
  Industry, Consumer Services

Source: Based on data from Home Depot Inc. Annual Reports

2012 Calculations

1 Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =

Ratio Description The company
Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnoverd. Home Depot Inc.'s average receivable collection period deteriorated from 2010 to 2011 and from 2011 to 2012.

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Operating Cycle

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No. of days

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    Jan 29, 2012 Jan 30, 2011 Jan 31, 2010 Feb 1, 2009 Feb 3, 2008 Jan 28, 2007
  Selected Financial Data
chart Average inventory processing period
chart Average receivable collection period
  Operating Cycle, Comparison to Industry
chart Home Depot Inc.1
  Industry, Consumer Services

Source: Based on data from Home Depot Inc. Annual Reports

2012 Calculations

1 Operating cycle = Average inventory processing period + Average receivable collection period
= + =

Ratio Description The company
Operating cycle Equal to average inventory processing period plus average receivables collection period. Home Depot Inc.'s operating cycle deteriorated from 2010 to 2011 but then improved from 2011 to 2012 exceeding 2010 level.

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Average Payables Payment Period

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    Jan 29, 2012 Jan 30, 2011 Jan 31, 2010 Feb 1, 2009 Feb 3, 2008 Jan 28, 2007
  Selected Financial Data
chart Payables turnover
  Average Payables Payment Period (no. of days), Comparison to Industry
chart Home Depot Inc.1
  Industry, Consumer Services

Source: Based on data from Home Depot Inc. Annual Reports

2012 Calculations

1 Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =

Ratio Description The company
Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. Home Depot Inc.'s average payables payment period declined from 2010 to 2011 and from 2011 to 2012.

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Cash Conversion Cycle

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No. of days

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    Jan 29, 2012 Jan 30, 2011 Jan 31, 2010 Feb 1, 2009 Feb 3, 2008 Jan 28, 2007
  Selected Financial Data
chart Average inventory processing period
chart Average receivable collection period
chart Average payables payment period
  Cash Conversion Cycle, Comparison to Industry
chart Home Depot Inc.1
  Industry, Consumer Services

Source: Based on data from Home Depot Inc. Annual Reports

2012 Calculations

1 Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =

Ratio Description The company
Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. Home Depot Inc.'s cash conversion cycle deteriorated from 2010 to 2011 but then improved from 2011 to 2012 not reaching 2010 level.

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