LOWES
Total liabilities
$30,864,000
$29,418,000
$27,974,000
$23,612,000
Stockholders' Equity
Common stock
$401,000
$415,000
$433,000
$455,000
Capital in excess of par value
$0
$22,000
$0
$0
Retained earnings
$3,452,000
$5,425,000
$6,241,000
$7,593,000
Accumulated other comprehensive income (loss)
-$209,000
$11,000
-$240,000
-$394,000
Total shareholders' equity
$3,644,000
$5,873,000
$6,434,000
$7,654,000
Total liabilities and stockholders’ equity
$34,508,000
$35,291,000
$34,408,000
$31,266,000
Additional Information
**Property and Equipment, at cost:
Land
$7,196,000
$7,414,000
$7,329,000
$7,086,000
Buildings & building improvements
$18,052,000
$18,521,000
$18,147,000
$17,451,000
Equipment
$10,090,000
$10,475,000
$10,978,000
$10,863,000
Construction in progress
$525,000
$530,000
$464,000
$513,000
Total cost
$35,863,000
$36,940,000
$36,918,000
$35,913,000
Less: accumulated depreciation
$17,431,000
$17,219,000
$16,969,000
$16,336,000
As Reported Annual Income Statement
Report Date
2018
2017
2016
Scale
Thousands
Thousands
Thousands
Net sales
$71,309,000
$68,619,000
$65,017,000
Cost of sales
$48,401,000
$45,210,000
$42,553,000
Gross margin
$22,908,000
$23,409,000
$22,464,000
Selling, general & administrative expense
$17,413,000
$15,376,000
$15,129,000
Depreciation & amortization
$ 1,477,000
$ 1,447,000
$ 1,489,000
Operating income (loss)
$ 4,018,000
$ 6,586,000
$ 5,846,000
Interest income (expense), net
$ (624,000)
$ (633,000)
$ (645,000)
Loss on extinguishment of debt
$ -
$ (464,000)
$ -
Pre-tax earnings (losses)
$ 3,394,000
$ 5,489,000
$ 5,201,000
Income tax provision
$ 1,080,000
$ 2,042,000
$ 2,108,000
Net earnings
$ 2,314,000
$ 3,447,000
$ 3,093,000
Additional Information
Weighted average shares outstanding - basic
XXXXXXXXXX,000
XXXXXXXXXX,000
XXXXXXXXXX,000
Cash dividends per share
1.85
1.58
1.33
Net cash flows from operating activities
$ 6,193,000
$ 5,065,000
$ 5,617,000
Home Depot
shares in Millions, $ in Millions
2018
2017
2016
Income Statement
Net Sales
$108,203
$100,904
$94,595
Cost of sales
71,043
66,548
62,282
Gross profit
37,160
34,356
32,313
Operating expenses:
Selling, general and administrative
19,513
17,864
17,132
Depreciation and amortization
1,870
1,811
1,754
Impairment loss
247
0
0
Total operating expenses
21,630
19,675
18,886
Operating income
15,530
14,681
13,427
Interest and other (income) expense:
Interest and investment income
-93
-74
-36
Interest expense
1,051
1,057
972
Othe
16
0
0
Interest and other, net
974
983
936
Earnings before provision for income taxes
14,556
13,698
12,491
Provision for income taxes
3,435
5,068
4,534
Net earnings
$11,121
$8,630
$7,957
Additional Information
Basic weighted average common shares
1,137
1,178
1,229
Cash dividend per share
4.12
3.56
2.76
Operating cash flow for the yea
13,038
12,031
9,783
Report Date XXXXXXXXXX
$ in Millions
Cu
ent assets:
Cash and cash equivalents$1,778$3,595$2,538$2,216
Receivables, net$1,936$1,952$2,029$1,890
Merchandise inventories$13,925$12,748$12,549$11,809
Other cu
ent assets$890$638$608$569
Total cu
ent assets$18,529$18,933$17,724$16,484
Net property and equipment$22,375$22,075$21,914$22,191
Goodwill$2,252$2,275$2,093$2,102
Other assets$847$1,246$1,235$1,196
Total assets$44,003$44,529$42,966$41,973
Cu
ent Liabilities:
Short-term debt$1,339$1,559$710$350
Accounts payable$7,755$7,244$7,000$6,565
Accrued salaries and related expenses$1,506$1,640$1,484$1,515
Sales taxes payable$656$520$508$476
Defe
ed revenue$1,782$1,805$1,669$1,566
Income taxes payable$11$54$25$34
Cu
ent installments of long-term debt$1,056$1,202$542$77
Other accrued expenses$2,611$2,170$2,195$1,941
Total cu
ent liabilities$16,716$16,194$14,133$12,524
Long-term debt, excluding cu
ent installments$26,807$24,267$22,349$20,789
Defe
ed income taxes$491$440$296$379
Other long-term liabilities$1,867$2,174$1,855$1,965
Total liabilities$45,881$43,075$38,633$35,657
Common stock, par value $0.05; authorized: 10,000 shares; issued: 1,782 at Fe
uary 3, 2019 and 1,780 shares at January 28, 2018; outstanding: 1,105 shares at Fe
uary 3, 2019 and 1,158 shares at January 28, 2018$89$89$88$88
Paid-in capital$10,578$10,192$9,787$9,347
Retained earnings$46,423$39,935$35,519$30,973
Accumulated other comprehensive loss-$772-$566-$867-$898
Treasury stock, at cost, 677 shares at Fe
uary 3, 2019 and 622 shares at January 28, 2018-$58,196-$48,196-$40,194-$33,194
Total stockholders’ (deficit) equity-$1,878$1,454$4,333$6,316
Total liabilities and stockholders’ equity$44,003$44,529$42,966$41,973
Additional Information
* No allowance account is created for receivables, i.e. Net receivables is equal to gross receivables
**Property and Equipment, at cost:
Land$8,3638352$8,2078,149
Buildings18199$18,073$17,77217,667
Furniture, Fixtures and Equipment XXXXXXXXXX,02010,279
Leasehold Improvements XXXXXXXXXX,5191,481
Construction in Progress XXXXXXXXXX
Capital Leases XXXXXXXXXX,1691,020
Less Accumulated Depreciation and Amortization XXXXXXXXXX,51217,075
Net Property and Equipment XXXXXXXXXX,91422,191
Project
1
Financial Statement Analysis
Group Project # 2
ACCT3303 Spring 2020
*** Warning: The financial ratios presented in the sample projects are
different from what required in the cu
ent projects. Therefore, you
CANNOT directly follow the samples. Some modification is needed.
The specific purposes of the projects are:
1. Apply to actual companies the knowledge and analytical techniques learned from our course.
2. Perform vertical and horizontal analysis and various ratios on the financial statements.
3. Compare the calculated results with competitor and across different years.
4. Summarize the analyses and make investment recommendations.
You will be analyzing the following firms:
a. Home Depot (HD)
. Lowes (LOW).
Please check the blackboard for the financial statements.
2
Project
The required tasks are detailed below:
(1) Prepare vertical common-size income statements and balance sheets for both companies.
Note: Use “Total Sales” and “Total Assets” as the denominators for income statement
and balance sheet, respectively. Compute for 2018, 2017, and 2016.
(2) Prepare horizontal analysis on income statements and balance sheets for both companies.
(3) Prepare ratio analyses (for 2018, 2017, and 2016) for both companies. You should
include the following ratios in your computations:
Profitability ratios
o Gross Profit margin
o Profit margin
o Return on assets
o Return on equity
Productivity
o Accounts Receivable Turnover
o Average Collection Period
o Inventory Turnover
o days inventory outstanding
o PPE Turnover
o Asset Turnover
Solvency
o Debt-to-equity
o Times interest earned
o Return on Financial leverage
Liquidity
o Cu
ent Ratio
o Quick Ratio
o Working capital
(3) Comment on the analytical results of the two companies based on your work in excel.
In addition to contrasting the ratios between the companies, you should interpret the
numbers and make suggestions as to why the ratio of one company might be highe
lower
than the other.
Note: General discussions of the ratios are given in our textbook, which will help you
structure your comments.
3
(4) Write a conclusive summary on the firms you have studied. Based upon your conclusions,
ecommend the better performing firm for potential investment. Your conclusions should
e based upon, and specifically reference, the analyses prepared in this report.
Report Format Requirements:
A. Report body requirements:
1. Cover page. List the title of the project, your name, and semeste
year.
2. Main body. Use the following sequence for report content:
a. Introduction to the two companies and to the purpose of the report
. Analytical section. This should include all your numerical analyses. This is where
you will discuss the results of, comments on, and conclusions about, the Common
Size, horizontal, and the ratio analyses for both companies.
c. Comparisons of companies and all other analysis (observations and/or
interpretations). (You may combine b and c if you wish, as long as both are well
covered.)
d. Conclusions and recommendation for investment.
3. References. List all major reference sources.
4. Appendices. Include tables and graphs of your numerical analyses. For reference
convenience, assign a title to each separate item, such as Table 1, Exhibit 1, etc.
B. Typesetting requirements:
1. Use size 12 font. Times New Roman is prefe
ed.
2. Double space between lines.
3. Number pages.
4. One inch on all sides.
C. Miscellaneous
The total report should be approximately 20 pages.
Notes
Plagiarism will not be tolerated. Evidence of plagiarism will result in a grade of “F” to
the course and may be subject to appropriate disciplines.
A portion of your grade will be assessed based on the overall report quality, clarity,
format, and cohesiveness.
4
A FREE RIDER in the group will not be tolerated. However, to report an alleged free
ider, you should send me a formal written complaint. You should carefully manage your
group over the semester to ensure that no teammate will take the chance of turning into a
free rider. Try to contact/manage your teammates frequently and inform me if any
member is not willing to participate the group work so we can address this issue ASAP.
A free rider will receive his/her group project grades solely based on what he/she has
contributed to the projects. If there is a free-rider in your group or a member drops the
class, the rest of the group members are still expected to