Following are income statements for Lowe’s and The Home Depot for the years ended

February 3, 2012, and January 29, 2012, respectively:

Lowe’s

(in millions)

Net sales .................$50,208

Cost of sales ............... 32,858

Gross profit ................. 17,350

Selling, general, and administrative ...... 12,593

Depreciation ............... 1,480

Interest, net ............... 371

Total operating expenses .......... 14,444

Pretax earnings .............. 2,906

Income tax provision ............ 1,067

Net earnings ................ $ 1,839

The Home Depot

(in millions)

Net sales .................$70,395

Cost of sales ............... 46,133

Gross profit ................ 24,262

Selling, general, and administrative ...... 16,028

Depreciation and amortization ........ 1,573

Total operating expenses ........... 17,601

Operating income ............. 6,661

Interest and investment income ....... (13)

Interest expense .............. 606

Other .................... —

Interest and other, net ........... 593

Earnings before provision for income taxes ... 6,068

Provision for income taxes ........... 2,185

Net earnings ................$ 3,883

1. The companies do not use exactly the same account titles. Align the accounts across the two companies in the manner you believe to be most appropriate. Then prepare common-size income statements for Lowe’s and The Home Depot.

2. Compare the two companies by using the common-size statements.