Common-Size Income Statement
Home Depot Inc., common-size consolidated income statement
Based on: 10-K (reporting date: 2025-02-02), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02).
- Cost of Sales
- The cost of sales as a percentage of net sales has shown a gradual increase over the periods, rising from -65.91% to around -66.58%. This indicates a slight intensification in the cost structure relative to sales, potentially indicating pressure on gross margins.
- Gross Profit
- Corresponding to the rising cost of sales, gross profit margins have steadily declined from 34.09% to 33.42%. Although the change is moderate, it reflects a modest erosion in profitability at the gross profit level.
- Selling, General and Administrative Expenses (SG&A)
- SG&A expenses have fluctuated over the periods, initially increasing from -17.91% to -18.51%, then dropping to a low of -16.7% before rising again to -18.02%. This variability suggests changes in operating efficiency or shifts in investment in administrative or selling activities.
- Depreciation and Amortization
- Depreciation and amortization expenses as a percentage of net sales have generally trended upward, from -1.8% to -1.9%, with a slight dip in intermediate years. This increase might be attributable to increased capital expenditure or asset base expansion.
- Operating Expenses
- Total operating expenses have mirrored the trends seen in SG&A and depreciation, initially peaking around -20.12%, followed by a decline and then a rise again to near -19.92%. This pattern implies cyclical management of operating costs.
- Operating Income
- Operating income demonstrated improvement during the mid-periods, increasing from 14.37% to a peak of around 15.27%, before declining afterwards to 13.49%. This fluctuation correlates with the trends in cost management and emphasizes the challenge in maintaining operating profitability.
- Interest Income and Expense
- Interest income has remained minimal but showed a slight increase in the latest periods. Conversely, interest expense initially decreased but then rose again, leading the net interest and other expenses to increase in magnitude over time, from -1.02% to -1.33%, reflecting higher financing costs or borrowings.
- Earnings Before Provision for Income Taxes
- Pre-tax earnings followed the pattern of operating income, improving mid-period and then declining, ending at 12.17% compared to 13.35% initially. This suggests that increased costs and interest expenses have compressed pre-tax profitability.
- Provision for Income Taxes
- The provision for income taxes has decreased slightly as a percentage of net sales, from -3.15% to -2.88%, indicating possible changes in tax strategies or effective tax rates during the periods analyzed.
- Net Earnings
- Net earnings margins have shown a declining trend from 10.2% to 9.28%, with a peak at 10.87% in the mid-periods. The overall reduction toward the end reflects the combined impact of increasing costs, declining gross profit margin, and rising interest expenses, affecting the bottom-line profitability.