FINANCE ASSIGNMENT

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Submitted file should include all 3 sheets (tabs):
This sheet with your answers to each question and the 2 completed ratio sheets.
Name: ________________________________________
1. Using Excel, calculate the ratios for Home Depot and Lowe's for each year.
2. What does each company do? Compare and note differences.
Home Depot
Lowe's
2. Time-Series Analysis. Using the ratios, comment on the trends over the 3 year period.
For Home Depot, did the shareholder's return (as measured by ROE) increase or decrease?
How? Cite the ratios (and values) that support your conclusion.
For Lowe's, did the shareholder's return (as measured by ROE) increase or decrease?
How? Cite the ratios (and values) that support your conclusion.
3. Cross-sectional analysis. Using the ratios, comment on the differences between Home Depot and Lowe's.
Limit your response to a comparision of the most recent year for both companies.
Which company earns more for its owners?
Why? Cite the ratios (and values) that support your conclusion.
Which company is more profitable?
Why? Cite the ratios (and values) that support your conclusion.
Which company is more efficient?
Why? Cite the ratios (and values) that support your conclusion.
Which company is more leveraged?
Why? Cite the ratios (and values) that support your conclusion.
Which company is more liquid?
Why? Cite the ratios (and values) that support your conclusion.
4. What is your overall assessment of each company based on your ratio analysis?
Cite the ratios (and values) that support your conclusion.

Lowe's

Lowe's Companies, Inc.
$ millions Fiscal Year Ending Fiscal Year Ending Fiscal Year Ending
1/31/14 1/30/15 1/29/16
Sales 53,417 56,223 59,074
(Cost of Sales) (34,941) (36,665) (38,504)
Gross Profit 18,476 19,558 20,570
(Selling, General and Administrative Expenses) (12,865) (13,281) (14,115)
Operating Profit (aka Earnings Before Interest and Taxes) 5,611 6,277 6,455
(Interest) 0 0 0
(Other) (1,938) (2,001) (2,036)
Net Income Before Tax 3,673 4,276 4,419
(Income Tax) (1,387) (1,578) (1,873)
Net Income After Tax 2,286 2,698 2,546
Cash and short term investments 576 591 712
Net Accounts Receivable 252 0 0
Inventory 9,127 8,911 9,458
Other Current Assets 341 349 391
Total current Assets 10,296 9,851 10,561
Net Plant, Property and Equipment 20,834 20,034 19,577
Other Long Term Assets 1,602 1,836 1,128
Total Assets 32,732 31,721 31,266
Accounts payable 5,793 5,897 6,453
Short Term Debt 435 552 1,104
Other Current Liabilities 2,648 2,899 2,935
Total Current Liabilities 8,876 9,348 10,492
Long Term Debt 10,086 10,806 11,545
Other Long Term Liabilities 1,917 1,599 1,575
Total Liabilities 20,879 21,753 23,612
Preferred Stock 0 0 0
Common Stock 515 480 455
Capital Surplus + other (17) (103) (394)
Treasury Stock 0 0 0
Retained Earnings 11,355 9,591 7,593
Stockholders' Equity 11,853 9,968 7,654
Total Liabilities + Stockholder's Equity 32,732 31,721 31,266
Return on Equity
Net Profit Margin
Gross Profit Margin
Operating Profit Margin
Total Asset Turnover
Collection Period (days)
Age of Inventoy (days)
Payment Period (days)*
Financial Leverage Multiplier
Debt Ratio
Liquidity: Current Ratio
Liquidity: Quick Ratio **
*use Cost of Goods Sold
** (Cash + Short Term invest + A/R) / Current Liabs

Home Depot

The Home Depot, Inc.
$ millions Fiscal Year Ending Fiscal Year Ending Fiscal Year Ending
2/2/14 2/1/15 1/31/16
Sales 78,812 83,176 88,519
(Cost of Sales) (51,897) (54,787) (58,254)
Gross Profit 26,915 28,389 30,265
(Selling, General and Administrative Expenses) (17,749) (17,920) (18,491)
Operating Profit (aka Earnings Before Interest and Taxes) 9,166 10,469 11,774
(Interest) (711) (830) (919)
(Other) 12 337 166
Net Income Before Tax 8,467 9,976 11,021
(Income Tax) (3,082) (3,631) (4,012)
Net Income After Tax 5,385 6,345 7,009
Cash and short term investments 1,929 1,723 2,216
Net Accounts Receivable 1,398 1,484 1,890
Inventory 11,057 11,079 11,809
Other Current Assets 895 1,016 1,078
Total current Assets 15,279 15,302 16,993
Net Plant, Property and Equipment 23,348 22,720 22,191
Other Long Term Assets 1,891 1,924 3,365
Total Assets 40,518 39,946 42,549
Accounts payable 9,379 9,473 10,533
Short Term Debt 33 328 427
Other Current Liabilities 1,337 1,468 1,566
Total Current Liabilities 10,749 11,269 12,526
Long Term Debt 14,691 16,869 20,888
Other Long Term Liabilities 2,556 2,486 2,819
Total Liabilities 27,996 30,624 36,233
Preferred Stock 0 0 0
Common Stock 88 88 88
Capital Surplus + other 8,448 8,433 8,449
Treasury Stock (19,194) (26,194) (33,194)
Retained Earnings 23,180 26,995 30,973
Stockholders' Equity 12,522 9,322 6,316
Total Liabilities + Stockholder's Equity 40,518 39,946 42,549
Return on Equity
Net Profit Margin
Gross Profit Margin
Operating Profit Margin
Total Asset Turnover
Collection Period (days)
Age of Inventoy (days)
Payment Period (days)*
Financial Leverage Multiplier
Debt Ratio
Liquidity: Current Ratio
Liquidity: Quick Ratio **
*use Cost of Goods Sold
** (Cash + Short Term invest + A/R) / Current Liabs