The following information relates to Home Depot, Inc., and Lowe’s Companies, Inc. for their 2017 and 2016 fiscal years.

Required

a. Compute the following ratios for the companies’ 2017 fiscal years (years ending in January and February of 2018):

(1) Current ratio.

(2) Average days to sell inventory. (Use average inventory.)

(3) Debt-to-assets ratio.

(4) Return on investment. (Use average assets and use “earnings from continuing operations” rather than “net earnings.”)

(5) Gross margin percentage.

(6) Asset turnover. (Use average assets.)

(7) Return on sales. (Use “earnings from continuing operations” rather than “net earnings.”)

(8) Plant assets to long-term debt ratio.

b. Which company appears to be more profitable? Explain your answer and identify which ratio(s) from Requirement a you used to reach your conclusion.

c. Which company appears to have the higher level of financial risk? Explain your answer and identify which ratio(s) from Requirement a you used to reach your conclusion.

d. Which company appears to be charging higher prices for its goods? Explain your answer and identify which ratio(s) from Requirement a you used to reach your conclusion.

e. Which company appears to be the more efficient at using its assets? Explain your answer and identify which ratio(s) from Requirement a you used to reach your conclusion.

HOME DEPOT, INC. Selected Financial Information (amounts in millions, except per share amounts) February 29, January 28, 2018 2017 $ 18,933 12,748 22,075 44,529 16,194 $17,724 12,549 21,914 42,966 14,133 24,500 Total current assets Merchandise inventory Property and equipment, net of depreciation Total assets Total current liabilities Total long-term liabilities Total liabilities 26,881 43,075 1,454 100,904 66,548 34,356 38,633 4,333 Total shareholders' equity Revenue Cost of goods sold Gross profit Operating income Earnings from continuing operations before income tax expense Income tax expense Net earnings Basic earnings per share 14,681 13,698 5,068 8,630 $ 7.33 94,595 62,282 32,313 13,427 12,491 4,534 7,957 $ 6.47