Selected financial data regarding current assets and current liabilities for The Home Depot and Lowe€™s, two close competitors in the building supply industry, are as follows:

Required:
1. Calculate the current ratio for The Home Depot and Lowe€™s. Which company has the better ratio? Compare your calculations with those for United Airlines and American Airlines reported in the chapter text. Which industry maintains a higher current ratio?
2. Calculate the acid-test (quick) ratio for The Home Depot and Lowe€™s. Which company has the better ratio? Compare your calculations with those for United Airlines and American Airlines reported in the chapter text. Which industry maintains a higher acid-test ratio?
3. How would the purchase of additional inventory on credit affect the current ratio? How would it affect the acid-testratio?

($ in millions) Current assets: The Home Depot Lowe's Cash and cash equivalents Current investments Net receivables nventory Other current assets 541 125 217 8,600 301 $9,784 2,494 1,395 10,710 773 Total current assets $15,372 Current liabilities Current debt Accounts payable and accrued liabilities Other current liabilities 1,321 8,871 1,270 $11,462 47 5,327 2,334 $7,708 Total current liabilities