The table below contains selected information from recent financial statements of The Home Depot, Inc., and Lowes
Question:
The table below contains selected information from recent financial statements of The Home Depot, Inc., and Lowe’s Companies, Inc., two companies in the home improvement retail industry ($ in millions):
Required:
Calculate the gross profit ratio, the inventory turnover ratio, and the average days in inventory for the two companies for their fiscal years ending in 2020. Compare your calculations for the two companies, taking into account the industry averages.
Net sales Cost of goods sold Year-end inventory Industry averages: Gross profit ratio Inventory turnover ratio Average days in inventory Home Depot 2/2/2020 $110,225 72,653 14,531 27.25% 2/3/2019 $108,203 71,043 13,925 3.63 times 101 days Lowe's 1/31/2020 $72,148 49,205 13,179 2/1/2019 $71,309 48,401 12,561
Step by Step Answer:
The gross profit ratios for the two companies are similar and both e...View the full answer
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
Students also viewed these Business questions
-
You sold short 100 shares of Global Payments, Inc. common stock on margin at $215.42 per share. Assume the initial margin is 50% and the maintenance margin is 30%. One year later, the stock price...
-
The table below contains selected financial information included in the 2009 financial statements of Saks, Inc., and Dillards, Inc., two companies in the department store industry. Required: 1....
-
The table below contains selected financial information included in the 2016 financial statements of Kohl's Corporation and Dillards, Inc., two companies in the department store industry. Required:...
-
Below is the article related to the funding and construction of the SD Padres' ballpark in downtown San Diego. The article below relates to the Padres' decision to incur substantial payoff...
-
In Problem 11, the banks have no excess reserves. Suppose that the Bank of Nocoin, the central bank, decreases bank reserves by $0.5 billion. a. Calculate the money multiplier. b. What happens to the...
-
Your firm has been engaged to examine the financial statements of Brown Appliances, Inc. for the year ended December 31. The company manufactures major appliances sold to the general public through...
-
For the given table of observed frequencies: a. Compute the row totals, the column totals, and the grand total. b. Construct the corresponding table of expected frequencies. c. Compute the value of...
-
Knox Corporation purchased 60 percent of Conway Company ownership on January 1, 20X7, for $277,500. Conway reported the following net income and dividend payments: On January 1, 20X7, Conway had...
-
(a) Calculate the monthly car loan payments if you take out the car loan, and verify that the numbers for interest paid ($4,779.20) quoted in the article is correct (within rounding). Also show that...
-
David Mashley teaches two undergraduate statistics courses at Kansas College. The class for Statistics 201 consists of 7 sophomores and 3 juniors. The more advanced course, Statistics 301, has 2...
-
On January 1, 2024, a company adopted the dollar-value LIFO method for its one inventory pool. The pools value on this date was $660,000. The 2024 and 2025 ending inventory valued at year-end costs...
-
The MegaMart Company began 2024 with inventory of 10,000 units at a cost of $7 per unit. During 2024, 50,000 units were purchased for $8.50 each. Sales for the year totaled 54,000 units leaving 6,000...
-
Should foreign governments pressure the Pushtuns to modify their criminal laws so that they are more in keeping with modern values? Why or why not? The mountainous area spanning the border between...
-
Nike reports total net income of $3,090 million for the current year. At the beginning of the current year its total assets are $11,500 million, and at the end of the current year assets total...
-
How does the underlying organizational culture affect the resolution of internal conflicts, and what strategies can leaders implement to foster a culture that inherently supports conflict resolution...
-
How might public policy and regulatory frameworks be designed to promote a higher standard of accountability among corporations, and what measures can be taken to ensure compliance without imposing...
-
Swifty Maintenance Corp. has a $305 monthly contract with Crane Treat Inc. for general maintenance services. Swifty invoices Crane on the first of the month for services that it performed in the...
-
Provide four examples of how management accounting information can be used to support a sustainability approach. (e.g. Including in product costs the environmental costs of activities undertaken to...
-
Refer to problem 17-1. What additional funds would be needed if the company's year-end 2015 assets had been $4 million? Assume that all other numbers are the same. Why is this AFN different from the...
-
1. What are some current issues facing Saudi Arabia? What is the climate for doing business in Saudi Arabia today? 2. Is it legal for Auger's firm to make a payment of $100,000 to help ensure this...
-
Quandary Corporation has a major customer who is alleging a significant product defect. Quandary engineers and attorneys have analyzed the claim and have concluded that there is a 51% chance that the...
-
Quandary Corporation has a major customer who is alleging a significant product defect. Quandary engineers and attorneys have analyzed the claim and have concluded that there is a 51% chance that the...
-
Quandary Corporation has a major customer who is alleging a significant product defect. Quandary engineers and attorneys have analyzed the claim and have concluded that there is a 51% chance that the...
-
A student bikes to school by traveling first dN = 1 . 1 0 miles north, then dW = 0 . 4 0 0 miles west, and finally dS = 0 . 2 20 miles south.Take the north direction as the positive y direction and...
-
Alternative objectives of firm decision-making, we expanded the profit motive to consider the goal of sustainability. As part of the motivation for studying the economics of sustainability, we...
-
The position of a particle moving along an x axis is given by x = 15.0t2 - 5.00t, where x is in meters and t is in seconds. Determine (a position, (b) the velocity, and (c) the acceleration of the...
Study smarter with the SolutionInn App