Comparing Financial Information
Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book, or download the annual reports from the Cases section of the text’s.
1. Does Lowe’s hold more or less inventory than The Home Depot at the end of January 2009?
2. Does Lowe’s follow the lower of cost or market rule? What method does Lowe’s use to determine the cost of its inventory? Comment on how this affects comparisons you might make between Lowe’s and The Home Depot’s inventory turnover ratios.
3. Compute to one decimal place Lowe’s inventory turnover ratio and days to sell for the 2008–09 fiscal year and compare to The Home Depot’s. What does this analysis suggest to you?