Stock Analysis on Net

Home Depot Inc. (NYSE:HD)

Analysis of Operating Leases

Microsoft Excel

An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.


Adjustments to Financial Statements for Operating Leases

Home Depot Inc., adjustments to financial statements

US$ in millions

Microsoft Excel
Feb 2, 2025 Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020
Adjustment to Total Assets
Total assets (as reported) 96,119 76,530 76,445 71,876 70,581 51,236
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1
Total assets (adjusted) 96,119 76,530 76,445 71,876 70,581 51,236
Adjustment to Total Debt
Total debt (as reported) 53,383 44,111 43,193 40,086 37,238 31,483
Add: Operating lease liability (before adoption of FASB Topic 842)2
Add: Current operating lease liabilities 1,274 1,050 945 830 828 828
Add: Long-term operating lease liabilities 7,633 7,082 6,226 5,353 5,356 5,066
Total debt (adjusted) 62,290 52,243 50,364 46,269 43,422 37,377

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).

1, 2 Equal to total present value of future operating lease payments.


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


Adjusted Financial Ratios for Operating Leases (Summary)

Home Depot Inc., adjusted financial ratios

Microsoft Excel
Feb 2, 2025 Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020
Total Asset Turnover1
Reported total asset turnover 1.66 1.99 2.06 2.10 1.87 2.15
Adjusted total asset turnover 1.66 1.99 2.06 2.10 1.87 2.15
Debt to Equity2
Reported debt to equity 8.04 42.25 27.65 11.29
Adjusted debt to equity 9.38 50.04 32.24 13.16
Return on Assets3 (ROA)
Reported ROA 15.40% 19.79% 22.38% 22.86% 18.23% 21.94%
Adjusted ROA 15.40% 19.79% 22.38% 22.86% 18.23% 21.94%

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).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Home Depot Inc. adjusted total asset turnover ratio deteriorated from 2023 to 2024 and from 2024 to 2025.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Home Depot Inc. adjusted debt to equity ratio deteriorated from 2023 to 2024 but then improved from 2024 to 2025 exceeding 2023 level.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Home Depot Inc. adjusted ROA deteriorated from 2023 to 2024 and from 2024 to 2025.

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


Adjusted Total Asset Turnover

Microsoft Excel
Feb 2, 2025 Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020
As Reported
Selected Financial Data (US$ in millions)
Net sales 159,514 152,669 157,403 151,157 132,110 110,225
Total assets 96,119 76,530 76,445 71,876 70,581 51,236
Activity Ratio
Total asset turnover1 1.66 1.99 2.06 2.10 1.87 2.15
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net sales 159,514 152,669 157,403 151,157 132,110 110,225
Adjusted total assets 96,119 76,530 76,445 71,876 70,581 51,236
Activity Ratio
Adjusted total asset turnover2 1.66 1.99 2.06 2.10 1.87 2.15

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).

2025 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 159,514 ÷ 96,119 = 1.66

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 159,514 ÷ 96,119 = 1.66

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Home Depot Inc. adjusted total asset turnover ratio deteriorated from 2023 to 2024 and from 2024 to 2025.

Adjusted Debt to Equity

Microsoft Excel
Feb 2, 2025 Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020
As Reported
Selected Financial Data (US$ in millions)
Total debt 53,383 44,111 43,193 40,086 37,238 31,483
Stockholders’ equity (deficit) 6,640 1,044 1,562 (1,696) 3,299 (3,116)
Solvency Ratio
Debt to equity1 8.04 42.25 27.65 11.29
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 62,290 52,243 50,364 46,269 43,422 37,377
Stockholders’ equity (deficit) 6,640 1,044 1,562 (1,696) 3,299 (3,116)
Solvency Ratio
Adjusted debt to equity2 9.38 50.04 32.24 13.16

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).

2025 Calculations

1 Debt to equity = Total debt ÷ Stockholders’ equity (deficit)
= 53,383 ÷ 6,640 = 8.04

2 Adjusted debt to equity = Adjusted total debt ÷ Stockholders’ equity (deficit)
= 62,290 ÷ 6,640 = 9.38

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Home Depot Inc. adjusted debt-to-equity ratio deteriorated from 2023 to 2024 but then improved from 2024 to 2025 exceeding 2023 level.

Adjusted Return on Assets (ROA)

Microsoft Excel
Feb 2, 2025 Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020
As Reported
Selected Financial Data (US$ in millions)
Net earnings 14,806 15,143 17,105 16,433 12,866 11,242
Total assets 96,119 76,530 76,445 71,876 70,581 51,236
Profitability Ratio
ROA1 15.40% 19.79% 22.38% 22.86% 18.23% 21.94%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net earnings 14,806 15,143 17,105 16,433 12,866 11,242
Adjusted total assets 96,119 76,530 76,445 71,876 70,581 51,236
Profitability Ratio
Adjusted ROA2 15.40% 19.79% 22.38% 22.86% 18.23% 21.94%

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).

2025 Calculations

1 ROA = 100 × Net earnings ÷ Total assets
= 100 × 14,806 ÷ 96,119 = 15.40%

2 Adjusted ROA = 100 × Net earnings ÷ Adjusted total assets
= 100 × 14,806 ÷ 96,119 = 15.40%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Home Depot Inc. adjusted ROA deteriorated from 2023 to 2024 and from 2024 to 2025.