Your group is required to undertake a comparative financial analysis of Home Depot (HD) versus Lowe's (LOW)

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Question:

Your group is required to undertake a comparative financial analysis of Home Depot (HD) versus Lowe's (LOW) using available financial data for the last three years from any of the following financial websites: Yahoo Finance Financial Modeling Prep You may also access other online resources HD and LOW are unique identifier Tickers for Home Depot and Lowe's. Using some key ratios from the five ratio categories in the attached handout, compare and analyze Home Depot (HD) versus Lowe's (LOW) in terms of: Liquidity Solvency Asset Utilization / Turnover Profitability Market Value

Please see attached image for the financial ratios for Home Depot and Lowes for 2021, 2022, and 2023:


		Long term solvent
Total debt ratio				The debt ratio tells us the degree of leverage used by the company.
	2021	2022	2023
homedepot	0.95	0.98	0.98
lowes	0.97	0.89	0.67

Debt equity ratio				This is a measurement of the percentage of the company's balance sheet that is financed by suppliers, lenders, creditors and obligors versus what the shareholders have committed.
homedepot	13.16	27.28	32.24
lowes	31.52	10.27	4.07

equity multiplier				This is a measure of financial leverage.
homedepot	21.39	42.38	48.94
lowes	32.52	9.27	3.07

time interest earned ratio			The lower a company's interest coverage ratio is, the more its debt expenses burden the company.
homedepot	12.60	16.14	13.90
lowes	9.13	12.49	7.79

Cash Coverage ratio				The lower a company's interest coverage ratio is, the more its debt expenses burden the company.
homedepot	12.61	16.14	13.90
lowes	9.13	12.50	7.79

		Short term solvent

current ratio					A current ratio of 1.0 or greater is an indication that the company is well-positioned to cover its current or short-term liabilities.
homedepot	1.23	1.01	1.41
lowes	1.19	1.02	1.10

quick ratio					The quick ratio is more conservative than the current ratio because it excludes inventory and other current assets, which generally are more difficult to turn into cash. A higher quick ratio means a more liquid current position.
homedepot	0.51	0.24	0.33
lowes	0.33	0.12	0.15

Cash ratio					The cash ratio is almost like an indicator of a firm's value under the worst-case scenario where the company is about to go out of business.
homedepot	0.34	0.08	0.12
lowes	0.25	0.06	0.07