Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book, or download the annual reports from the Cases section in the Connect library.
1. Use the companies’ fiscal 2013 balance sheets to determine the amounts in the accounting equation (A = L + SE). Is Lowe’s or The Home Depot larger in terms of total assets?
2. Does Lowe’s have more or less current liabilities than The Home Depot at the end of fiscal 2013? Which company has a larger current ratio?
3. On the balance sheet, Lowe’s reports inventory of $ 9,127,000,000. Does this amount represent the expected selling price? Why or why not?
4. Has financing for Lowe’s investment in assets primarily come from liabilities or stockholders’ equity at January 31, 2014? For each company, calculate the percentage of total assets financed by total liabilities. Thinking back to Chapter 1, does this imply Lowe’s investors are taking on more, or less, risk than those investing in The Home Depot?

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