a. Compute return on equity (ROE), return on assets (ROA), and return on financial leverage (ROFL) for each company in 2011. b. Disaggregate the ROAs computed into profit margin (PM) and asset turnover (AT) components. Which of these factors drives ROA for each company? c. Compute the gross profit margin (GPM) and operating expense-to-sales ratios for each company. How do these companies profitability measures compare? d. Compute the accounts receivable turnover (ART), inventory turnover (INVT), and property, plant and equipment turnover (PPET) for each company. How do these companies turnover measures compare? e. Compare and evaluate these competitors performance in 2011.

HOME DEPOT, INC LOWE'S COMPANIES Balance Sheets Balance Sheets S millions) 2011 2010 2011 2010 Assets 286 471 1,245 1,085 8,321 523 8,355 9631,224 10,072 9,967 1,187 135 295 1,008 635 260 Liabilities and shareholders' equity Short-term debt and current portion of long-term debt...... S30 S 1,042 S592 S 36 4,856 2,929 4,351 667 707 4,352 2,805 801 1,533 7,891 7,035 391 368 1,358 9,37610,122 8,707 272 2,135 6,537 467 1,464 531 1,569 Total liabilities and shareholders' equity . S40,518 $40,125 S33,559 $33,699 . . .. . . . . . . HOME DEPOT, INC. Income Statements LOWE'S COMPANIES Income Statements S millions) 2011 2010 2011 2010 44,693 32,858 31,663 24,262 23,304 17,350 17,152 17,465 14,073 13,592 5,8393,2773,560 Investment (income) and other (income) expense.... 530 379 340 Income before income taxes . .. _ . . . . .. _ . . . . 6,068 5,273 2,906 3,228 1,935 1,0671,218