# Analysis of financial statements: Lowes vs Home Depot

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

https://brainmass.com/business/wto-and-gatt/361020

#### Solution Preview

I put text boxes on each of the four ratio tabs. I computed a few additional ratios and attached the actual financial ...

#### 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.