Analysis of financial statements: Lowes vs Home Depot
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Analyze the ratios of both companies using the ratios below (see data attached in excel). Refer to the financial statements for this section in order to expand the information base and gain insight into the numbers and the ratios. Explain your conclusion about their financial status using the ratios and consider how the ratios are related.
Home Depot
PROFITABILITY
Return On Assets
Return On Invested Capital
Cash Flow To Sales
Cost of Goods Sold To Sales
Gross Profit Margin
Operating Profit Margin
Pretax Margin
Net Margin
Lowes
PROFITABILITY
Return On Assets
Return On Invested Capital
Cash Flow To Sales
Cost of Goods Sold To Sales
Gross Profit Margin
Operating Profit Margin
Pretax Margin
Net Margin
Home Depot
ASSET UTILIZATION
Assets Per Employee
Assets Turnover
Inventory Turnover
Capital Expend Pct Total Assets
Capital Expend Pct Sales
Lowes
ASSET UTILIZATION
Assets Per Employee
Assets Turnover
Inventory Turnover
Capital Expend Pct Total Assets
Capital Expend Pct Sales
Home Depot
LEVERAGE
Total Debt Pct Common Equity
LT Debt Pct Common Equity
LT Debt Pct Total Capital
Equity Pct Total Capital
Total Debt Pct Total Assets
Common Equity Pct Total Assets
Total Capital Pct Total Assets
Dividend Payout
Cash Dividend Coverage Ratio
Working Cap Pct Total Capital
Lowes
LEVERAGE
Total Debt Pct Common Equity
LT Debt Pct Common Equity
LT Debt Pct Total Capital
Equity Pct Total Capital
Total Debt Pct Total Assets
Common Equity Pct Total Assets
Total Capital Pct Total Assets
Dividend Payout
Cash Dividend Coverage Ratio
Working Cap Pct Total Capital
Home Depot
LIQUIDITY
Quick Ratio
Current Ratio
Cash Ratio
Receivables Pct Current Assets
Accounts Receivable Days
Inventories Days Held
Lowes
LIQUIDITY
Quick Ratio
Current Ratio
Cash Ratio
Receivables Pct Current Assets
Accounts Receivable Days
Inventories Days Held
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Solution Summary
This is a classic assignment: analyze two competitors in the same industry. The ratios are examined and discussed in four sections in everyday language the novice can grasp. The ratios were downloaded from BIZSTAT and so the actual computation (numerator and denominator) are not in the solution. This is coaching on interpreting (not computing) ratios.
Solution Preview
I put text boxes on each of the four ratio tabs. I computed a few additional ratios and attached the actual financial ...
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