1. What method of depreciation does Lowes use? 2. What is Lowes fixed asset turnover ratio for...

Question:

1. What method of depreciation does Lowe’s use?

2. What is Lowe’s fixed asset turnover ratio for the year ended February 3, 2017? Compare this ratio to that of The Home Depot for the comparable period and describe what it implies about the operations of the two companies.

3. Lowe’s estimated useful life of buildings is shorter than that estimated by The Home Depot. How will this affect the fixed asset turnover ratios of the two companies?

4. What amount of Depreciation Expense was reported on Lowe’s income statement for the year ended February 3, 2017? What percentage of net sales is it? Compare this percentage to that of The Home Depot for the comparable period and describe what this implies about the two companies’ operations.

Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. Fiscal 2016 for Lowe’s runs from January 30, 2016, to February 3, 2017.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.

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