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 of the text's Web site at www.mhhe.com/phillips4e.
Required:
1. Use the company's balance sheet to determine the amounts in the accounting equation (A 5 L 1 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 January 2011? Which company has a larger current ratio?
3. On the balance sheet, Lowe's reports inventories of $8,321,000,000. 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 28, 2011? Thinking back to Chapter 1, what does this imply about the risk assumed by Lowe's investors, relative to those investing in The Home Depot?