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

Home Depot Inc. (NYSE:HD)

Analysis of Income Taxes

Advanced level

Income Tax Expense (Benefit)

Home Depot Inc., income tax expense (benefit), continuing operations

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Feb 2, 2020 Feb 3, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016 Feb 1, 2015
Federal 2,370  2,495  4,128  3,870  3,228  2,884 
State 572  544  499  462  466  373 
Foreign 340  372  331  315  296  258 
Current 3,282  3,411  4,958  4,647  3,990  3,515 
Federal 259  67  (67) (102) 21  127 
State (72) 1  89  13  10  (11)
Foreign 4  (44) 88  (24) (9) — 
Deferred 191  24  110  (113) 22  116 
Provision for income taxes 3,473  3,435  5,068  4,534  4,012  3,631 

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).

Item Description The company
Current Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Home Depot Inc.’s current decreased from 2018 to 2019 and from 2019 to 2020.
Deferred Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Home Depot Inc.’s deferred decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.
Provision for income taxes Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Home Depot Inc.’s provision for income taxes decreased from 2018 to 2019 but then slightly increased from 2019 to 2020.

Effective Income Tax Rate (EITR)

Home Depot Inc., effective income tax rate (EITR) reconciliation

Microsoft Excel LibreOffice Calc
Feb 2, 2020 Feb 3, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016 Feb 1, 2015
Federal statutory income tax rate 21.00% 21.00% 34.00% 35.00% 35.00% 35.00%
Combined federal, state, and foreign effective tax rates 23.60% 23.60% 37.00% 36.30% 36.40% 36.40%

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).

Item Description The company
Combined federal, state, and foreign effective tax rates Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

Components of Deferred Tax Assets and Liabilities

Home Depot Inc., components of deferred tax assets and liabilities

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
Deferred compensation 169  183  185  284  269  272 
Accrued self-insurance liabilities 285  298  295  440  433  440 
State income taxes 100  96  109  152  140  121 
Non-deductible reserves 156  231  220  328  315  283 
Net operating losses 70  17  19  33  58  45 
Lease liabilities 1,536  —  —  —  —  — 
Impairment of investment —  —  —  —  —  30 
Other 135  116  124  268  267  279 
Deferred tax assets 2,451  941  952  1,505  1,482  1,470 
Valuation allowance —  —  —  (3) (3) (6)
Deferred tax assets after valuation allowance 2,451  941  952  1,502  1,479  1,464 
Merchandise inventories (26) (9) (9) (64) (129) (61)
Property and equipment (1,107) (893) (770) (1,128) (1,165) (1,156)
Goodwill and other intangibles (195) (179) (243) (368) (368) (161)
Right-of-use assets (1,458) —  —  —  —  — 
Other (232) (230) (251) (147) (116) (234)
Deferred tax liabilities (3,018) (1,311) (1,273) (1,707) (1,778) (1,612)
Net deferred tax assets (liabilities) (567) (370) (321) (205) (299) (148)

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).

Item Description The company
Deferred tax assets Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Home Depot Inc.’s deferred tax assets decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.
Deferred tax assets after valuation allowance Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Home Depot Inc.’s deferred tax assets after valuation allowance decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.
Net deferred tax assets (liabilities) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. Home Depot Inc.’s net deferred tax assets (liabilities) decreased from 2018 to 2019 and from 2019 to 2020.

Deferred Tax Assets and Liabilities, Classification

Home Depot Inc., deferred tax assets and liabilities, classification

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
Current deferred tax assets (included in Other current assets) —  —  —  —  509  444 
Noncurrent deferred tax assets (included in Other assets) 139  121  119  91  48  51 
Current deferred tax liabilities (included in Other accrued expenses) —  —  —  —  2  1 
Noncurrent deferred tax liabilities 706  491  440  296  854  642 

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).

Item Description The company
Noncurrent deferred tax assets (included in Other assets) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. Home Depot Inc.’s noncurrent deferred tax assets (included in Other assets) increased from 2018 to 2019 and from 2019 to 2020.
Noncurrent deferred tax liabilities Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. Home Depot Inc.’s noncurrent deferred tax liabilities increased from 2018 to 2019 and from 2019 to 2020.

Adjustments to Financial Statements: Removal of Deferred Taxes

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 Current Assets
Current assets (as reported) 19,810  18,529  18,933  17,724  16,993  15,302 
Less: Current deferred tax assets, net —  —  —  —  509  444 
Current assets (adjusted) 19,810  18,529  18,933  17,724  16,484  14,858 
Adjustment to Total Assets
Total assets (as reported) 51,236  44,003  44,529  42,966  42,549  39,946 
Less: Current deferred tax assets, net —  —  —  —  509  444 
Less: Noncurrent deferred tax assets, net 139  121  119  91  48  51 
Total assets (adjusted) 51,097  43,882  44,410  42,875  41,992  39,451 
Adjustment to Current Liabilities
Current liabilities (as reported) 18,375  16,716  16,194  14,133  12,526  11,269 
Less: Current deferred tax liabilities, net —  —  —  —  2  1 
Current liabilities (adjusted) 18,375  16,716  16,194  14,133  12,524  11,268 
Adjustment to Total Liabilities
Total liabilities (as reported) 54,352  45,881  43,075  38,633  36,233  30,624 
Less: Current deferred tax liabilities, net —  —  —  —  2  1 
Less: Noncurrent deferred tax liabilities, net 706  491  440  296  854  642 
Total liabilities (adjusted) 53,646  45,390  42,635  38,337  35,377  29,981 
Adjustment to Stockholders’ Equity (deficit)
Stockholders’ equity (deficit) (as reported) (3,116) (1,878) 1,454  4,333  6,316  9,322 
Less: Net deferred tax assets (liabilities) (567) (370) (321) (205) (299) (148)
Stockholders’ equity (deficit) (adjusted) (2,549) (1,508) 1,775  4,538  6,615  9,470 
Adjustment to Net Earnings
Net earnings (as reported) 11,242  11,121  8,630  7,957  7,009  6,345 
Add: Deferred income tax expense (benefit) 191  24  110  (113) 22  116 
Net earnings (adjusted) 11,433  11,145  8,740  7,844  7,031  6,461 

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 Deferred Taxes (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
Current Ratio
Reported current ratio 1.08 1.11 1.17 1.25 1.36 1.36
Adjusted current ratio 1.08 1.11 1.17 1.25 1.32 1.32
Net Profit Margin
Reported net profit margin 10.20% 10.28% 8.55% 8.41% 7.92% 7.63%
Adjusted net profit margin 10.37% 10.30% 8.66% 8.29% 7.94% 7.77%
Total Asset Turnover
Reported total asset turnover 2.15 2.46 2.27 2.20 2.08 2.08
Adjusted total asset turnover 2.16 2.47 2.27 2.21 2.11 2.11
Financial Leverage
Reported financial leverage — — 30.63 9.92 6.74 4.29
Adjusted financial leverage — — 25.02 9.45 6.35 4.17
Return on Equity (ROE)
Reported ROE — — 593.54% 183.64% 110.97% 68.06%
Adjusted ROE — — 492.39% 172.85% 106.29% 68.23%
Return on Assets (ROA)
Reported ROA 21.94% 25.27% 19.38% 18.52% 16.47% 15.88%
Adjusted ROA 22.38% 25.40% 19.68% 18.30% 16.74% 16.38%

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 current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. Home Depot Inc.’s adjusted current ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Home Depot Inc.’s adjusted net profit margin ratio improved from 2018 to 2019 and from 2019 to 2020.
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 ROA A profitability ratio calculated as adjusted 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 Current Ratio

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)
Current assets 19,810  18,529  18,933  17,724  16,993  15,302 
Current liabilities 18,375  16,716  16,194  14,133  12,526  11,269 
Liquidity Ratio
Current ratio1 1.08 1.11 1.17 1.25 1.36 1.36
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted current assets 19,810  18,529  18,933  17,724  16,484  14,858 
Adjusted current liabilities 18,375  16,716  16,194  14,133  12,524  11,268 
Liquidity Ratio
Adjusted current ratio2 1.08 1.11 1.17 1.25 1.32 1.32

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 Current ratio = Current assets ÷ Current liabilities
= 19,810 ÷ 18,375 = 1.08

2 Adjusted current ratio = Adjusted current assets ÷ Adjusted current liabilities
= 19,810 ÷ 18,375 = 1.08

Liquidity ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. Home Depot Inc.’s adjusted current ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Net Profit Margin

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 
Net sales 110,225  108,203  100,904  94,595  88,519  83,176 
Profitability Ratio
Net profit margin1 10.20% 10.28% 8.55% 8.41% 7.92% 7.63%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings 11,433  11,145  8,740  7,844  7,031  6,461 
Net sales 110,225  108,203  100,904  94,595  88,519  83,176 
Profitability Ratio
Adjusted net profit margin2 10.37% 10.30% 8.66% 8.29% 7.94% 7.77%

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 Net profit margin = 100 × Net earnings ÷ Net sales
= 100 × 11,242 ÷ 110,225 = 10.20%

2 Adjusted net profit margin = 100 × Adjusted net earnings ÷ Net sales
= 100 × 11,433 ÷ 110,225 = 10.37%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Home Depot Inc.’s adjusted net profit margin ratio improved from 2018 to 2019 and from 2019 to 2020.

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 Deferred Taxes
Selected Financial Data (US$ in millions)
Net sales 110,225  108,203  100,904  94,595  88,519  83,176 
Adjusted total assets 51,097  43,882  44,410  42,875  41,992  39,451 
Activity Ratio
Adjusted total asset turnover2 2.16 2.47 2.27 2.21 2.11 2.11

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 ÷ 51,097 = 2.16

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 Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets 51,097  43,882  44,410  42,875  41,992  39,451 
Adjusted stockholders’ equity (deficit) (2,549) (1,508) 1,775  4,538  6,615  9,470 
Solvency Ratio
Adjusted financial leverage2 — — 25.02 9.45 6.35 4.17

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)
= 51,097 ÷ -2,549 = —

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 Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings 11,433  11,145  8,740  7,844  7,031  6,461 
Adjusted stockholders’ equity (deficit) (2,549) (1,508) 1,775  4,538  6,615  9,470 
Profitability Ratio
Adjusted ROE2 — — 492.39% 172.85% 106.29% 68.23%

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 × Adjusted net earnings ÷ Adjusted stockholders’ equity (deficit)
= 100 × 11,433 ÷ -2,549 = —

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 Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings 11,433  11,145  8,740  7,844  7,031  6,461 
Adjusted total assets 51,097  43,882  44,410  42,875  41,992  39,451 
Profitability Ratio
Adjusted ROA2 22.38% 25.40% 19.68% 18.30% 16.74% 16.38%

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 × Adjusted net earnings ÷ Adjusted total assets
= 100 × 11,433 ÷ 51,097 = 22.38%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted 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.