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Description of business for Lowe?s Companies, Inc.

Lowe?s Companies, Inc. and subsidiaries (the Company or Lowe?s) is a Fortune? 50 company and the world?s second largest home improvement retailer. As of February 3, 2017, Lowe?s operated 2,129 home improvement and hardware stores, representing approximately 213 million square feet of retail selling space.

These operations were comprised of 1,820 stores located across 50 U.S. states, including 87 Orchard Supply Hardware (Orchard) stores, as well as 299 stores in Canada, and 10 stores in Mexico.

Required

a. Determine which company appears to have the higher operating leverage.

b. Write a paragraph or two explaining why the company you identified in Requirement a might be expected to have the higher operating leverage.

c. If revenues for both companies increased by 5 percent, which company do you think would likely experience the greater percentage increase in operating earnings? Explain your answer.

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Facebook, Inc. 2015 2016 $27,638 12,427 $17,928 6,225 Revenue Operating earnings Lowe's, Inc. 2016 2015 Revenue Operating earnings $65,017 5,846 $59,074 4,971