Home Depot Inc. (NYSE:HD)

Debt to equity

The debt to equity ratio exhibits significant fluctuations over the analyzed periods. Starting from a recorded value of 11.29 in early 2021, it spikes sharply to 27.65 in 2023 and then further increases to 42.25 in early 2024, indicating a rising reliance on debt financing relative to equity. Notably, by early 2025, this ratio dramatically decreases to 8.04, suggesting a substantial reduction in debt or an increase in equity during that final period.

Debt to equity (including operating lease liability)

This metric follows a similar pattern to the basic debt to equity ratio, but with consistently higher values reflecting the inclusion of operating lease liabilities. From 13.16 in 2021, it rises sharply to 32.24 in 2023 and then to 50.04 in 2024, emphasizing increased leverage when lease liabilities are considered. It then declines significantly to 9.38 in 2025, aligning with the trend of reduced leverage seen in the previous ratio.

Debt to capital

The debt to capital ratio remains relatively stable and low throughout the periods, ranging between 0.89 and 1.11. Although the earliest ratio was 1.11 in 2020, it declines to a low of 0.89 by 2025. This stability suggests consistent capital structure management, with slight improvement in reducing debt proportion relative to total capital over time.

Debt to capital (including operating lease liability)

Values for this ratio closely mirror those of the standard debt to capital ratio, only marginally higher due to the inclusion of operating lease liabilities. The highest value observed is 1.09 in 2020, with a general downward trend arriving at 0.90 in 2025, indicative of a stable or slightly improved debt level relative to the capital base.

Debt to assets

The debt to assets ratio shows moderate variability, starting at 0.61 in 2020 and decreasing to 0.53 in 2021. It then rises gradually to 0.58 by 2024 before slightly reducing to 0.56 in 2025. This pattern suggests some volatility in the use of debt relative to total assets but overall reflects a moderate and relatively consistent leverage level.

Debt to assets (including operating lease liability)

Including operating lease liabilities, this ratio displays a generally upward trend from 0.73 in 2020 to a peak of 0.68 in 2024, before a slight decrease to 0.65 in 2025. The ratio remains higher than the standard debt to assets metric throughout, highlighting the material impact of operating leases on the firm's asset leverage.

Financial leverage

The financial leverage ratio demonstrates significant volatility, with a steep upward trajectory from 21.39 in 2021 to 48.94 in 2023 and further to 73.3 in 2024, indicating increasing use of debt or other liabilities magnifying the equity base. However, this trend reverses strongly in 2025, dropping to 14.48, suggesting a marked de-leveraging or equity increase.

Interest coverage

Interest coverage ratio remains generally healthy but trends downward over time. Beginning at 13.25 in 2020, it sees a slight increase to 17.14 in 2022, but subsequently declines to 9.36 by 2025. This reduction reflects decreasing earnings relative to interest obligations, signaling potentially lower debt servicing capability or increased interest costs.

Fixed charge coverage

The fixed charge coverage ratio follows a comparable declining trend. Starting at 8.26 in 2020, it peaks at 9.94 in 2022 before falling to 5.87 in 2025. This decrease indicates diminishing capacity to cover fixed financial obligations, which could impact financial flexibility and risk profile.

Total debt

The total debt of the company has shown a consistent upward trend over the analyzed periods. Starting at approximately 31.5 billion USD, the debt increased steadily each year, peaking at around 53.4 billion USD in the most recent period. This indicates a significant rise in leverage over time.

Stockholders’ equity (deficit)

Stockholders' equity has exhibited volatility throughout the periods. Initially, it was negative at -3.1 billion USD, then turned positive in the next year to approximately 3.3 billion USD, only to dip again into a deficit of about -1.7 billion USD two years later. In the subsequent years, equity returned to positive values, ending at 6.6 billion USD in the most recent period. This fluctuation suggests variable profitability or changes in retained earnings and capital structure over time.

Debt to equity ratio

The debt to equity ratio has demonstrated significant variability, reflecting the fluctuations in equity and the consistent rise in debt. Although data for certain years are missing, available figures show extreme values: a very high ratio of over 11 in one period, escalating to over 42 in another, indicative of a highly leveraged position relative to equity. However, the most recent ratio has decreased sharply to around 8, suggesting an improvement in equity levels or a change in capital management strategy.

Total debt (including operating lease liability)

The total debt shows a continuous upward trend over the period analyzed. It increased from 37,377 million USD in early 2020 to 62,290 million USD in early 2025, indicating a consistent expansion of the company's financial leverage. The most notable jumps are observed between 2023 and 2025, where the debt increased by nearly 11,000 million USD.

Stockholders’ equity (deficit)

The stockholders’ equity exhibits significant volatility, alternating between negative and positive values. It started with a deficit of 3,116 million USD in 2020, improved to a positive 3,299 million USD in 2021, then reverted to a deficit in 2022 at -1,696 million USD. From 2023 onwards, equity remained positive and showed a marked improvement, reaching 6,640 million USD in 2025. This fluctuation suggests periods of financial instability or restructuring followed by recovery and strengthening of equity.

Debt to equity (including operating lease liability) ratio

The debt to equity ratio is highly unstable throughout the timeframe. It was extremely high at 13.16 (value missing in the first period), increased dramatically to 32.24 in 2022, and peaked at 50.04 in 2023. This reflects a heavily leveraged position during that interval. Subsequently, there was a significant reduction to 9.38 in 2025, which aligns with the improvement in equity and suggests efforts toward deleveraging or equity strengthening. The ratio indicates considerable financial risk during the middle years, followed by improved capital structure management.

Total Debt

The total debt of the company shows an overall upward trend over the examined periods. Starting at $31,483 million in early 2020, the debt increased consistently each year, reaching $53,383 million by early 2025. This demonstrates a significant rise in the company's leverage, with the most notable jump occurring between 2024 and 2025.

Total Capital

Total capital fluctuates over the analyzed period but exhibits an upward movement overall. It increased from $28,367 million in 2020 to $40,537 million in 2021, followed by a slight decrease in 2022. From 2022 onward, the total capital steadily increased, reaching $60,023 million in 2025. The increase in total capital especially in the last two observed years suggests growth in the company’s financial base.

Debt to Capital Ratio

The debt to capital ratio here appears inconsistent and may indicate either irregular data recording or unusual calculations, as it starts above 1.0 at 1.11 in 2020, then declines to 0.92 in 2021, and fluctuates slightly above and below 1.0 in subsequent years before dropping to 0.89 in 2025. Typically, a ratio above 1.0 would suggest total debt exceeding total capital, which is uncommon. Despite this, the general trend from 2021 onward indicates a modest decrease in this ratio, implying a relative reduction in leverage compared to capital.

The financial data reveals the evolution of debt, capital, and leverage ratios over a six-year period. Analyzing the figures offers insights into the company's financial structuring and risk profile over time.

Total Debt (Including Operating Lease Liability)

The total debt displayed a consistent increase across all years, rising from 37,377 million USD in early 2020 to 62,290 million USD by early 2025. The increment was steady, with notable increases especially in the final year, suggesting a growing reliance on debt or expansion initiatives financed through borrowing.

Total Capital (Including Operating Lease Liability)

Total capital showed an upward trend as well, increasing from 34,261 million USD in 2020 to 68,930 million USD in 2025. There was a dip in 2022 compared to 2021, but capital rebounded in the subsequent years, eventually surpassing previous levels significantly by 2025. This indicates an overall growth in the company’s capital base, albeit with some fluctuations.

Debt to Capital Ratio (Including Operating Lease Liability)

Despite rising absolute debt and capital values, the debt-to-capital ratio remained relatively stable throughout the period, fluctuating narrowly between 0.90 and 1.09. Initially, the ratio was high at 1.09 in 2020 but decreased sharply to 0.93 in 2021, indicating an improvement in capital structure relative to debt. Following this, the ratio marginally increased and then slightly declined toward the end of the period, settling at 0.90 in 2025. Overall, this suggests that although debt increased significantly, capital rose proportionally, maintaining a controlled leverage level.

Total Debt

Over the analyzed period, total debt has shown a consistent upward trend. Starting at $31,483 million in early 2020, it increased significantly each year, reaching $53,383 million by early 2025. The rise in debt is particularly notable between 2024 and 2025, with a sharp increase suggesting potentially increased borrowing or financing activities during that final year.

Total Assets

Total assets also demonstrated a steady increase throughout the timeframe. From $51,236 million in 2020, assets grew to $96,119 million by 2025. The largest annual growth appears between 2024 and 2025, reflecting possible substantial investments, acquisitions, or asset appreciation contributing to the expanded asset base.

Debt to Assets Ratio

The debt to assets ratio fluctuated moderately over the period without a clear upward or downward trend. Initially at 0.61 in 2020, it declined to a low of 0.53 in 2021. Subsequently, the ratio ranged between 0.56 and 0.58 before settling at 0.56 in 2025. This relatively stable ratio indicates that while absolute levels of debt and assets have increased, the company's leverage relative to its asset base has remained consistent, suggesting maintained financial risk levels.

Total Debt (including operating lease liability)

The total debt shows a consistent increasing trend over the observed periods, rising from $37,377 million in early 2020 to $62,290 million by early 2025. This indicates a significant rise in the company's leverage and borrowing activities over five years.

Total Assets

Total assets also exhibit a steady upward trend, growing from $51,236 million in 2020 to $96,119 million in 2025. The increase in assets is substantial, suggesting expansion or increased investment in company resources during this timeframe.

Debt to Assets Ratio (including operating lease liability)

The debt to assets ratio declined from 0.73 in 2020 to 0.62 in 2021, indicating improved asset coverage relative to debt. However, this ratio slightly increased afterwards, reaching 0.68 in 2024 before dropping to 0.65 in 2025. Although there are fluctuations, the ratio consistently remains below the initial 2020 level, reflecting a moderate reduction in leverage relative to asset growth over the period.

Overall Analysis

Both total debt and total assets have increased substantially over the five-year span, with assets growing at a pace that generally outstrips debt increase, as reflected in the overall lowering of the debt to assets ratio compared to 2020. The fluctuations in the debt to assets ratio suggest some variability in leverage management, but the company's asset base expansion appears to have mitigated overall risk from rising debt levels. This balance may indicate strategic financing decisions aimed at supporting growth while maintaining a relatively stable leverage position.

Total Assets

The total assets exhibit a generally increasing trend over the observed periods. Starting from approximately 51.2 billion US dollars in early 2020, there is a significant rise to about 70.6 billion by early 2021. Subsequent years show a more moderate increase, reaching around 76.5 billion by early 2024, followed by a notable jump to 96.1 billion in early 2025. This upward movement suggests continued growth in the company's asset base over the five-year horizon.

Stockholders' Equity (Deficit)

Stockholders' equity fluctuates considerably during the period. It started with a negative balance of approximately -3.1 billion in early 2020, turned positive to about 3.3 billion by early 2021, then reverted to a negative figure near -1.7 billion in early 2022. From 2023 onwards, equity remains positive but with moderate variations: 1.6 billion in early 2023, 1.0 billion in early 2024, and a significant increase to 6.6 billion in early 2025. This volatility may indicate changes in retained earnings, share repurchases, or other equity-related activities.

Financial Leverage

Financial leverage shows a highly volatile pattern. Data is missing for early 2020 and early 2022. The ratio was extremely high at 21.39 in early 2021, skyrocketed further to 48.94 by early 2023, followed by a very steep increase to 73.3 in early 2024, then sharply dropped to 14.48 in early 2025. These fluctuations suggest periods of significant increases in debt relative to equity, followed by a deleveraging phase in the final period.

Earnings before Interest and Tax (EBIT)

The EBIT shows an overall upward trend from 2020 to 2023, rising from 15,916 million US dollars in 2020 to a peak of 24,094 million in 2023. However, there is a slight decline in the subsequent two years, decreasing to 21,867 million in 2024 and then further to 21,727 million in 2025. This indicates strong earnings growth up to 2023, followed by a moderate reduction in operating income thereafter.

Interest Expense

Interest expense has consistently increased throughout the period under review. Starting at 1,201 million US dollars in 2020, it rose steadily each year, reaching 2,321 million in 2025. This continuous increase suggests growing borrowing costs or higher debt levels over the years.

Interest Coverage Ratio

The interest coverage ratio, which measures the company's ability to cover interest expenses with earnings, exhibits a declining trend. It peaked at 17.14 in 2022, followed by a noticeable decrease to 9.36 by 2025. Despite remaining above the critical threshold of 1, this decline points to reduced margin of safety in meeting interest obligations, likely driven by the rising interest expenses coupled with the drop in EBIT after 2023.

Overall Analysis

The data reveals a period of strong earnings growth until early 2023, after which profitability slightly diminishes. Concurrently, interest expenses have steadily increased, placing pressure on the company’s interest coverage capacity. The declining interest coverage ratio indicates that the company faces higher financial risk related to its debt servicing ability, stemming from higher interest costs and decreased earnings growth. Monitoring these trends is essential for assessing the company’s financial health and debt management strategies going forward.

Earnings before fixed charges and tax

The earnings demonstrated a generally increasing trend from 2020 through 2023, rising from 16,743 million USD in early 2020 to a peak of 25,263 million USD in early 2023. However, in the following years, the earnings decreased to 23,226 million USD in early 2024 and then remained relatively stable at 23,388 million USD in early 2025. This indicates a strong growth phase up to 2023, followed by a decline and stabilization.

Fixed charges

Fixed charges consistently increased throughout the entire period from 2,028 million USD in 2020 to 3,982 million USD in early 2025. This rise was gradual initially but became more pronounced after 2022, suggesting increasing financial obligations or interest expenses affecting the company.

Fixed charge coverage ratio

The fixed charge coverage ratio, which measures the ability to cover fixed charges with earnings, increased from 8.26 in 2020 to a peak of 9.94 in early 2022. After that, it declined steadily to 5.87 in early 2025. The decrease in this ratio corresponds with the rise in fixed charges and the reduction in earnings. A ratio above 5 still indicates a satisfactory coverage level, but the downward trend signals reduced financial flexibility and increased risk related to fixed financial obligations.