Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B.

Required:

1. Use the companies’ fiscal 2016 balance sheets to determine the amounts in the accounting equation (A = L + SE). Is Lowe’s or The Home Depot larger in terms of total assets?
2. Does Lowe’s have more or less current liabilities than The Home Depot at the end of fiscal 2016? Which company has a larger current ratio?
3. On its fiscal 2016 year-end balance sheet, Lowe’s reports inventory of $10,458,000,000. Does this amount represent the expected selling price? Why or why not?
4. Has financing for Lowe’s investment in assets primarily come from liabilities or stockholders’ equity at the end of fiscal 2016? For each company, calculate the percentage of total assets financed by total liabilities. Thinking back to Chapter 1, does this imply Lowe’s investors are taking on more, or less, risk than those investing in The Home Depot?