Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Home Depot Inc. (NYSE:HD)

Analysis of Goodwill and Intangible Assets

Advanced level


Adjustments to Financial Statements: Removal of Goodwill

Home Depot Inc., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Feb 2, 2020 Feb 3, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016 Feb 1, 2015
Adjustment to Total Assets
Total assets (as reported) 51,236  44,003  44,529  42,966  42,549  39,946 
Less: Goodwill 2,254  2,252  2,275  2,093  2,102  1,353 
Total assets (adjusted) 48,982  41,751  42,254  40,873  40,447  38,593 
Adjustment to Stockholders’ Equity (deficit)
Stockholders’ equity (deficit) (as reported) (3,116) (1,878) 1,454  4,333  6,316  9,322 
Less: Goodwill 2,254  2,252  2,275  2,093  2,102  1,353 
Stockholders’ equity (deficit) (adjusted) (5,370) (4,130) (821) 2,240  4,214  7,969 

Based on: 10-K (filing date: 2020-03-25), 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-22), 10-K (filing date: 2017-03-23), 10-K (filing date: 2016-03-24), 10-K (filing date: 2015-03-26).


Home Depot Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Goodwill (Summary)

Home Depot Inc., adjusted financial ratios

Microsoft Excel LibreOffice Calc
Feb 2, 2020 Feb 3, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016 Feb 1, 2015
Total Asset Turnover
Reported total asset turnover 2.15 2.46 2.27 2.20 2.08 2.08
Adjusted total asset turnover 2.25 2.59 2.39 2.31 2.19 2.16
Financial Leverage
Reported financial leverage 30.63 9.92 6.74 4.29
Adjusted financial leverage 18.25 9.60 4.84
Return on Equity (ROE)
Reported ROE 593.54% 183.64% 110.97% 68.06%
Adjusted ROE 355.22% 166.33% 79.62%
Return on Assets (ROA)
Reported ROA 21.94% 25.27% 19.38% 18.52% 16.47% 15.88%
Adjusted ROA 22.95% 26.64% 20.42% 19.47% 17.33% 16.44%

Based on: 10-K (filing date: 2020-03-25), 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-22), 10-K (filing date: 2017-03-23), 10-K (filing date: 2016-03-24), 10-K (filing date: 2015-03-26).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Home Depot Inc.’s adjusted total asset turnover ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Home Depot Inc.’s adjusted ROA improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020 not reaching 2018 level.

Home Depot Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Feb 2, 2020 Feb 3, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016 Feb 1, 2015
As Reported
Selected Financial Data (US$ in millions)
Net sales 110,225  108,203  100,904  94,595  88,519  83,176 
Total assets 51,236  44,003  44,529  42,966  42,549  39,946 
Activity Ratio
Total asset turnover1 2.15 2.46 2.27 2.20 2.08 2.08
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net sales 110,225  108,203  100,904  94,595  88,519  83,176 
Adjusted total assets 48,982  41,751  42,254  40,873  40,447  38,593 
Activity Ratio
Adjusted total asset turnover2 2.25 2.59 2.39 2.31 2.19 2.16

Based on: 10-K (filing date: 2020-03-25), 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-22), 10-K (filing date: 2017-03-23), 10-K (filing date: 2016-03-24), 10-K (filing date: 2015-03-26).

2020 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 110,225 ÷ 51,236 = 2.15

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 110,225 ÷ 48,982 = 2.25

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Home Depot Inc.’s adjusted total asset turnover ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Feb 2, 2020 Feb 3, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016 Feb 1, 2015
As Reported
Selected Financial Data (US$ in millions)
Total assets 51,236  44,003  44,529  42,966  42,549  39,946 
Stockholders’ equity (deficit) (3,116) (1,878) 1,454  4,333  6,316  9,322 
Solvency Ratio
Financial leverage1 30.63 9.92 6.74 4.29
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets 48,982  41,751  42,254  40,873  40,447  38,593 
Adjusted stockholders’ equity (deficit) (5,370) (4,130) (821) 2,240  4,214  7,969 
Solvency Ratio
Adjusted financial leverage2 18.25 9.60 4.84

Based on: 10-K (filing date: 2020-03-25), 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-22), 10-K (filing date: 2017-03-23), 10-K (filing date: 2016-03-24), 10-K (filing date: 2015-03-26).

2020 Calculations

1 Financial leverage = Total assets ÷ Stockholders’ equity (deficit)
= 51,236 ÷ -3,116 =

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity (deficit)
= 48,982 ÷ -5,370 =

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Feb 2, 2020 Feb 3, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016 Feb 1, 2015
As Reported
Selected Financial Data (US$ in millions)
Net earnings 11,242  11,121  8,630  7,957  7,009  6,345 
Stockholders’ equity (deficit) (3,116) (1,878) 1,454  4,333  6,316  9,322 
Profitability Ratio
ROE1 593.54% 183.64% 110.97% 68.06%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net earnings 11,242  11,121  8,630  7,957  7,009  6,345 
Adjusted stockholders’ equity (deficit) (5,370) (4,130) (821) 2,240  4,214  7,969 
Profitability Ratio
Adjusted ROE2 355.22% 166.33% 79.62%

Based on: 10-K (filing date: 2020-03-25), 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-22), 10-K (filing date: 2017-03-23), 10-K (filing date: 2016-03-24), 10-K (filing date: 2015-03-26).

2020 Calculations

1 ROE = 100 × Net earnings ÷ Stockholders’ equity (deficit)
= 100 × 11,242 ÷ -3,116 =

2 Adjusted ROE = 100 × Net earnings ÷ Adjusted stockholders’ equity (deficit)
= 100 × 11,242 ÷ -5,370 =

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Feb 2, 2020 Feb 3, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016 Feb 1, 2015
As Reported
Selected Financial Data (US$ in millions)
Net earnings 11,242  11,121  8,630  7,957  7,009  6,345 
Total assets 51,236  44,003  44,529  42,966  42,549  39,946 
Profitability Ratio
ROA1 21.94% 25.27% 19.38% 18.52% 16.47% 15.88%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net earnings 11,242  11,121  8,630  7,957  7,009  6,345 
Adjusted total assets 48,982  41,751  42,254  40,873  40,447  38,593 
Profitability Ratio
Adjusted ROA2 22.95% 26.64% 20.42% 19.47% 17.33% 16.44%

Based on: 10-K (filing date: 2020-03-25), 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-22), 10-K (filing date: 2017-03-23), 10-K (filing date: 2016-03-24), 10-K (filing date: 2015-03-26).

2020 Calculations

1 ROA = 100 × Net earnings ÷ Total assets
= 100 × 11,242 ÷ 51,236 = 21.94%

2 Adjusted ROA = 100 × Net earnings ÷ Adjusted total assets
= 100 × 11,242 ÷ 48,982 = 22.95%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Home Depot Inc.’s adjusted ROA improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020 not reaching 2018 level.