SPGI - Home Depot: A Concerning Trend In Buybacks

Foreword: Implications Of Share Repurchases For Liquidity

Distributions to shareholders by way of share repurchases, while shareholders' funds are in deficit, might not be illegal, but it does appear to have potential to increased risk for both shareholders and creditors. Despite being technically insolvent since 2018, Home Depot (HD) has continued to repurchase shares, resulting in progressive increases in shareholders' deficits. When shareholders' equity is in deficit, the liabilities of the company exceed the assets. That might not be an issue if the company is continuing to do business and generating additional cash