Lowes Companies Inc. (LOW) operates over 1,800 home improvement retail stores and is a competitor of The
Question:
Lowe’s Companies Inc. (LOW) operates over 1,800 home improvement retail stores and is a competitor of The Home Depot (HD). The following data (in millions) were adapted from a recent financial statement of Lowe’s:
Total assets ............................$35,291
Total liabilities .........................29,418
Total stockholders’ equity .......5,873
Earnings per share ..................$ 4.09
1. Compute the debt ratio. Round to one decimal place.
2. Given your answer to part (1), what is the ratio of stockholders’ equity to total assets? Round to one decimal place.
3. Are Lowe’s operations financed primarily with liabilities or equity?
4. With a market price of $100.53, compute the price-earnings ratio.
5. Compare the ratios computed in (1)-(2) with those of Home Depot computed in MBA 8-8 for Year 2.
6. Compare the price-earnings ratios of Lowe’s and The Home Depot (MBA 8-8). Comment on any differences.
Step by Step Answer: