Please answer the following questions:

a$.$ What do the financial ratios in case Exhibit $7$ tell you about the operating performance of Home

Depot? What additional information do the different ratios provide? Complete and compare a similar

analysis for Lowe's.

b$.$ How sensitive is return on capital to the forecast assumptions in case Exhibit $8?$ What independent

changes in Carrie Galeotafiore's estimates are required to drive the $2002$ return$-$on$-$capital estimate

below Home Depot's cost$-$of$-$capital estimate of $12\mathrm{.}3\%?$ Look specifically at gross margin, cash operating

expenses, receivable turnover, inventory turnover, and P&E turnover. What effect does sales growth

have on return of capital? Explain your findings.

c$.$ Do you agree with Galeotafiore's forecast for Home Depot? How would you adjust it$?$

d$.$ How would your forecast assumptions differ for Lowe's?

e$.$ Complete a five$-$year forecast for Lowe's.