Stock Analysis on Net

Home Depot Inc. (NYSE:HD)

Financial Reporting Quality: Aggregate Accruals

Microsoft Excel

Earnings can be decomposed into cash and accrual components. The accrual component (aggregate accruals) has been found to have less persistence than the cash component, and therefore (1) earnings with higher accrual component are less persistent than earnings with smaller accrual component, all else equal; and (2) the cash component of earnings should receive a higher weighting evaluating company performance.


Balance-Sheet-Based Accruals Ratio

Home Depot Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Feb 2, 2025 Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020
Operating Assets
Total assets 96,119 76,530 76,445 71,876 70,581 51,236
Less: Cash and cash equivalents 1,659 3,760 2,757 2,343 7,895 2,133
Operating assets 94,460 72,770 73,688 69,533 62,686 49,103
Operating Liabilities
Total liabilities 89,479 75,486 74,883 73,572 67,282 54,352
Less: Short-term debt 316 1,035 974
Less: Current installments of long-term debt 4,582 1,368 1,231 2,447 1,416 1,839
Less: Long-term debt, excluding current installments 48,485 42,743 41,962 36,604 35,822 28,670
Operating liabilities 36,096 31,375 31,690 33,486 30,044 22,869
 
Net operating assets1 58,364 41,395 41,998 36,047 32,642 26,234
Balance-sheet-based aggregate accruals2 16,969 (603) 5,951 3,405 6,408
Financial Ratio
Balance-sheet-based accruals ratio3 34.02% -1.45% 15.25% 9.91% 21.77%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Amazon.com Inc. 26.40% 18.01% 32.91% 49.06%
Lowe’s Cos. Inc. -2.68% 8.87% -2.92% 2.66% -12.39%
TJX Cos. Inc. 7.22% 30.23% 73.65% -109.84% 15.53%
Balance-Sheet-Based Accruals Ratio, Sector
Consumer Discretionary Distribution & Retail 0.00% 20.94% 16.15% 26.47% 31.88%
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Discretionary 0.00% 12.16% 12.17% 12.67% 12.65%

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 2025 Calculation
Net operating assets = Operating assets – Operating liabilities
= 94,46036,096 = 58,364

2 2025 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2025 – Net operating assets2024
= 58,36441,395 = 16,969

3 2025 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 16,969 ÷ [(58,364 + 41,395) ÷ 2] = 34.02%

4 Click competitor name to see calculations.

Financial ratio Description The company
Balance-sheet-based accruals ratio Ratio is found by dividing balance-sheet-based aggregate accruals by average net operating assets. Using the balance-sheet-based accruals ratio, Home Depot Inc. deteriorated earnings quality from 2024 to 2025.

Cash-Flow-Statement-Based Accruals Ratio

Home Depot Inc., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Feb 2, 2025 Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020
Net earnings 14,806 15,143 17,105 16,433 12,866 11,242
Less: Net cash provided by operating activities 19,810 21,172 14,615 16,571 18,839 13,723
Less: Net cash used in investing activities (21,031) (4,729) (3,140) (2,969) (10,170) (2,653)
Cash-flow-statement-based aggregate accruals 16,027 (1,300) 5,630 2,831 4,197 172
Financial Ratio
Cash-flow-statement-based accruals ratio1 32.13% -3.12% 14.43% 8.24% 14.26%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Amazon.com Inc. 16.87% -2.63% -8.54% 48.44%
Lowe’s Cos. Inc. -4.80% 7.91% -4.62% -0.14% -17.28%
TJX Cos. Inc. 3.04% 23.97% 55.57% -121.39% 14.48%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Consumer Discretionary Distribution & Retail 0.00% 13.19% 0.41% -4.02% 29.06%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Discretionary 0.00% 9.69% 4.57% 1.83% 11.33%

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 2025 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 16,027 ÷ [(58,364 + 41,395) ÷ 2] = 32.13%

2 Click competitor name to see calculations.

Financial ratio Description The company
Cash-flow-statement-based accruals ratio Ratio is found by dividing cash-flow-statement-based aggregate accruals by average net operating assets. Using the cash-flow-statement-based accruals ratio, Home Depot Inc. deteriorated earnings quality from 2024 to 2025.