An investor has approached you about whether purchasing stock in the company would be a wise investment. Using your financial analysis of the company, you will send a letter to the investor summarizing your findings and explaining whether you recommend a stock purchase at this time. Refer to the Annual Reports for Approved Companies located in the course materials. You will use information in the Form 10-K to complete this assignment. Using the correct formulas and a separate tab for each analysis, calculate the following ratios using Excel

You will use information in the Form 10-K for the company you selected in the Topic 1 to complete this assignment. Using the correct formulas and a separate tab for each analysis, calculate the following ratios using Excel:

1. Three liquidity ratios for the past 2 years
2. Three solvency ratios for the past 2 years
3. Three profitability ratios for the past 2 years

In addition, conduct research about a competitor company within the same sector using IBIS World and other topic resources. Complete a competitor analysis that includes a minimum of three ratios and compares your company to a competitor company using these ratios to determine financial performance as well as how the company compares to overall industry averages. Justify your analysis by explaining your findings.

Using your research findings and analysis of company performance in relation to industry competitors, construct a 500-750 word letter making stock purchase recommendations for a potential investor. In the letter, address the following, referencing specific ratios and comparative numbers as appropriate.

1. Discuss the overall financial performance of your company in relation to industry averages and a specific competitor. Explain whether the company performed better or worse than the competition using specific numbers and providing an explanation of what the numbers illustrate.
2. Recommend whether the potential investor should purchase stock in your company and justify your recommendation based upon your research and analysis of the company ratios and industry competition.

Lowe's Companies, Inc. Consolidated Statements of Earnings (In millions, except per share and percentage data) $ January 31, 2020 Amount % Sales 72,148 100.00% $ 49,205 68.20 22,943 31.80 Fiscal Years Ended February 1, 2019 Amount % Sales 71,309 100.00% $ 48,401 67.88 22,908 32.12 February 2, 2018 Amount % Sales 68,619 100.00% 46,185 67.31 22,434 32.69 Current Earnings Net sales Cost of sales Gross margin Expenses: Selling, general and administrative Depreciation and amortization Operating income Interest - net Loss on extinguishment of debt Pre-tax earnings Income tax provision Net earnings 15,367 1,262 6,314 691 21.30 1.75 8.75 0.96 17,413 1,477 4,018 624 24.41 2.07 5.64 0.88 14,444 1,404 6,586 633 464 5,489 2,042 3,447 21.04 2.05 9.60 0.92 0.68 8.00 2.98 5.02% 5,623 1,342 4,281 7.79 1.86 5.93% $ 3,394 1,080 2,314 4.76 1.52 3.24% $ $ 5.49 Basic earnings per common share Diluted earnings per common share Cash dividends per share $ $ $ $ $ $ 5.49 2.13 2.84 2.84 1.85 $ 4.09 4.09 1.58 $ Lowe's Companies, Inc. Consolidated Statements of Comprehensive Income (In millions, except percentage data) Fiscal Years Ended February 1, 2019 February 2, 2018 Amount % Sales Amount % Sales 2,314 3.24% $ 3,447 5.02% January 31, 2020 Amount % Sales Net earnings 4,281 5.93% $ Foreign currency translation adjustments - net of tax 94 0.13 Other (21) (0.03) Other comprehensive income/loss) 73 0.10 Comprehensive income $ 4,354 6.03% $ See accompanying notes to consolidated financial statements. (221) (0.30) 251 0.37 1 (220) 2,094 (0.30) 2.94% $ 251 3,698 0.37 5.39% Lowe's Companies, Inc. Consolidated Balance Sheets (In millions, except par value) January 31, 2020 February 1, 2019 $ 511 218 716 $ 160 13,179 1,263 15,318 18,669 3,891 372 12,561 938 14,228 18,432 256 294 216 303 702 303 995 34,508 39,471 $ Assets Current assets: Cash and cash equivalents Short-term investments Merchandise inventory - net Other current assets Total current assets Property, less accumulated depreciation Operating lease right-of-use assets Long-term investments Deferred income taxes - net Goodwill Other assets Total assets Liabilities and shareholders' equity Current liabilities: Short-term borrowings Current maturities of long-term debt Current operating lease liabilities Accounts payable Accrued compensation and employee benefits Deferred revenue Other current liabilities Total current liabilities Long-term debt, excluding current maturities Noncurrent operating lease liabilities Deferred revenue - extended protection plans Other liabilities Total liabilities $ 1,941 $ 597 722 1,110 501 7,659 684 1,219 2,581 15,182 16,768 3,943 894 8,279 662 1,299 2,425 14,497 14,391 712 827 1,149 30,864 37,499 Commitments and contingencies Shareholders' equity: Preferred stock - $5 par value, none issued Common stock - $0.50 par value; Shares issued and outstanding January 31, 2020 February 1, 2019 Capital in excess of par value Retained earnings Accumulated other comprehensive loss Total shareholders' equity Total liabilities and shareholders' equity See accompanying notes to consolidated financial statements. 763 801 381 401 1,727 (136) 1,972 39,471 $ 3,452 (209) 3,644 34,508 S 42 Lowe's Companies, Inc. Consolidated Statements of Shareholders' Equity (In millions, except per share data) Accumulated Common Stock Capital in Other Total Excess Retained Comprehensive Shareholders Shares Amount of Par Value Earnings Income/(Loss) Equity Balance February 3, 2017 866 S 433 $ S 6,241 $ (240) 6,434 Net earnings 3,447 3,447 Other comprehensive income 251 251 Cash dividends declared, $1.58 per share (1,324) (1,324) Share-based payment expense 99 99 Repurchase of common stock (40) (20) (215) (2,939) (3,174) Issuance of common stock under share- based payment plans 4 2 138 140 Balance February 2, 2018 830 S 415 $ 22 s 5,425 $ 11 S 5,873 Cumulative effect of accounting change 33 33 Net earnings 2,314 2,314 Other comprehensive loss (220) (220) Cash dividends declared, $1.85 per share (1,500) (1,500) Share-based payment expense 74 74 Repurchase of common stock (32) (16) (209) (2,820) (3,045) Issuance of common stock under share- based payment plans 3 2 113 115 Balance February 1, 2019 801 S 401 $ - S 3,452 $ (209) S 3,644 Cumulative effect of accounting change (263) (263) Net earnings 4,281 4,281 Other comprehensive income 73 73 Cash dividends declared, $2.13 per share (1,653) (1,653) Share-based payment expense 98 98 Repurchase of common stock (41) (21) (214) (4,090) (4,325) Issuance of common stock under share- based payment plans 3 1 116 117 Balance January 31, 2020 763 $ 381 $ S 1,727 $ (136) S 1,972 See accompanying notes to consolidated financial statements. Lowe's Companies, Inc. Consolidated Statements of Cash Flows (In millions) Fiscal Years Ended January 31, February 1, February 2, 2020 2019 2018 $ 4,281 $ 2,314 S 3,447 1,607 1,540 1,410 468 177 (151) 630 952 53 40 117 12 9 464 (82) 99 98 74 Cash flows from operating activities: Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization Noncash lease expense Deferred income taxes Loss on property and other assets - net Impairment of goodwill Loss on extinguishment of debt Loss/(gain) on cost method and equity method investments Share-based payment expense Changes in operating assets and liabilities: Merchandise inventory - net Other operating assets Accounts payable Other operating liabilities Net cash provided by operating activities Cash flows from investing activities: Purchases of investments Proceeds from sale/maturity of investments Capital expenditures Proceeds from sale of property and other long-term assets Acquisition of business - net Other - net Net cash used in investing activities Cash flows from financing activities: Net change in commercial paper Net proceeds from issuance of debt Repayment of long-term debt (600) (376) (637) (654) 4,296 (1,289) (110) 1,720 437 6,193 (791) 250 (92) 137 5,065 (743) 695 (1,484) 163 (1,373) 1,393 (1,174) 76 (981) 1,114 (1,123) 45 (2) (1,080) (509) 13 (1,441) (1,369) 220 (415) 625 3,972 (1,113) 2,968 (2,849) (326) (1,369) (1,080) (1,441) 220 (415) Net cash used in investing activities Cash flows from financing activities: Net change in commercial paper Net proceeds from issuance of debt Repayment of long-term debt Proceeds from issuance of common stock under share-based payment plans Cash dividend payments Repurchase of common stock Other - net Net cash used in financing activities Effect of exchange rate changes on cash Net increase (decrease) in cash and cash equivalents, including cash classified within current assets held for sale Less: Net increase/(decrease) in cash classified within current assets held for sale Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year See accompanying notes to consolidated financial statements. 44 3,972 (1,113) 118 (1,618) (4,313) (1) (2,735) (326) 114 (1,455) (3,037) (5) (5,124) (12) 625 2,968 (2,849) 139 (1,288) (3,192) (10) (3,607) 1 13 30 193 12 205 (23) (54) (77) 588 511 $ 30 511 716 $ 558 588 Lowe's Companies, Inc. Consolidated Statements of Earnings (In millions, except per share and percentage data) $ January 31, 2020 Amount % Sales 72,148 100.00% $ 49,205 68.20 22,943 31.80 Fiscal Years Ended February 1, 2019 Amount % Sales 71,309 100.00% $ 48,401 67.88 22,908 32.12 February 2, 2018 Amount % Sales 68,619 100.00% 46,185 67.31 22,434 32.69 Current Earnings Net sales Cost of sales Gross margin Expenses: Selling, general and administrative Depreciation and amortization Operating income Interest - net Loss on extinguishment of debt Pre-tax earnings Income tax provision Net earnings 15,367 1,262 6,314 691 21.30 1.75 8.75 0.96 17,413 1,477 4,018 624 24.41 2.07 5.64 0.88 14,444 1,404 6,586 633 464 5,489 2,042 3,447 21.04 2.05 9.60 0.92 0.68 8.00 2.98 5.02% 5,623 1,342 4,281 7.79 1.86 5.93% $ 3,394 1,080 2,314 4.76 1.52 3.24% $ $ 5.49 Basic earnings per common share Diluted earnings per common share Cash dividends per share $ $ $ $ $ $ 5.49 2.13 2.84 2.84 1.85 $ 4.09 4.09 1.58 $ Lowe's Companies, Inc. Consolidated Statements of Comprehensive Income (In millions, except percentage data) Fiscal Years Ended February 1, 2019 February 2, 2018 Amount % Sales Amount % Sales 2,314 3.24% $ 3,447 5.02% January 31, 2020 Amount % Sales Net earnings 4,281 5.93% $ Foreign currency translation adjustments - net of tax 94 0.13 Other (21) (0.03) Other comprehensive income/loss) 73 0.10 Comprehensive income $ 4,354 6.03% $ See accompanying notes to consolidated financial statements. (221) (0.30) 251 0.37 1 (220) 2,094 (0.30) 2.94% $ 251 3,698 0.37 5.39% Lowe's Companies, Inc. Consolidated Balance Sheets (In millions, except par value) January 31, 2020 February 1, 2019 $ 511 218 716 $ 160 13,179 1,263 15,318 18,669 3,891 372 12,561 938 14,228 18,432 256 294 216 303 702 303 995 34,508 39,471 $ Assets Current assets: Cash and cash equivalents Short-term investments Merchandise inventory - net Other current assets Total current assets Property, less accumulated depreciation Operating lease right-of-use assets Long-term investments Deferred income taxes - net Goodwill Other assets Total assets Liabilities and shareholders' equity Current liabilities: Short-term borrowings Current maturities of long-term debt Current operating lease liabilities Accounts payable Accrued compensation and employee benefits Deferred revenue Other current liabilities Total current liabilities Long-term debt, excluding current maturities Noncurrent operating lease liabilities Deferred revenue - extended protection plans Other liabilities Total liabilities $ 1,941 $ 597 722 1,110 501 7,659 684 1,219 2,581 15,182 16,768 3,943 894 8,279 662 1,299 2,425 14,497 14,391 712 827 1,149 30,864 37,499 Commitments and contingencies Shareholders' equity: Preferred stock - $5 par value, none issued Common stock - $0.50 par value; Shares issued and outstanding January 31, 2020 February 1, 2019 Capital in excess of par value Retained earnings Accumulated other comprehensive loss Total shareholders' equity Total liabilities and shareholders' equity See accompanying notes to consolidated financial statements. 763 801 381 401 1,727 (136) 1,972 39,471 $ 3,452 (209) 3,644 34,508 S 42 Lowe's Companies, Inc. Consolidated Statements of Shareholders' Equity (In millions, except per share data) Accumulated Common Stock Capital in Other Total Excess Retained Comprehensive Shareholders Shares Amount of Par Value Earnings Income/(Loss) Equity Balance February 3, 2017 866 S 433 $ S 6,241 $ (240) 6,434 Net earnings 3,447 3,447 Other comprehensive income 251 251 Cash dividends declared, $1.58 per share (1,324) (1,324) Share-based payment expense 99 99 Repurchase of common stock (40) (20) (215) (2,939) (3,174) Issuance of common stock under share- based payment plans 4 2 138 140 Balance February 2, 2018 830 S 415 $ 22 s 5,425 $ 11 S 5,873 Cumulative effect of accounting change 33 33 Net earnings 2,314 2,314 Other comprehensive loss (220) (220) Cash dividends declared, $1.85 per share (1,500) (1,500) Share-based payment expense 74 74 Repurchase of common stock (32) (16) (209) (2,820) (3,045) Issuance of common stock under share- based payment plans 3 2 113 115 Balance February 1, 2019 801 S 401 $ - S 3,452 $ (209) S 3,644 Cumulative effect of accounting change (263) (263) Net earnings 4,281 4,281 Other comprehensive income 73 73 Cash dividends declared, $2.13 per share (1,653) (1,653) Share-based payment expense 98 98 Repurchase of common stock (41) (21) (214) (4,090) (4,325) Issuance of common stock under share- based payment plans 3 1 116 117 Balance January 31, 2020 763 $ 381 $ S 1,727 $ (136) S 1,972 See accompanying notes to consolidated financial statements. Lowe's Companies, Inc. Consolidated Statements of Cash Flows (In millions) Fiscal Years Ended January 31, February 1, February 2, 2020 2019 2018 $ 4,281 $ 2,314 S 3,447 1,607 1,540 1,410 468 177 (151) 630 952 53 40 117 12 9 464 (82) 99 98 74 Cash flows from operating activities: Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization Noncash lease expense Deferred income taxes Loss on property and other assets - net Impairment of goodwill Loss on extinguishment of debt Loss/(gain) on cost method and equity method investments Share-based payment expense Changes in operating assets and liabilities: Merchandise inventory - net Other operating assets Accounts payable Other operating liabilities Net cash provided by operating activities Cash flows from investing activities: Purchases of investments Proceeds from sale/maturity of investments Capital expenditures Proceeds from sale of property and other long-term assets Acquisition of business - net Other - net Net cash used in investing activities Cash flows from financing activities: Net change in commercial paper Net proceeds from issuance of debt Repayment of long-term debt (600) (376) (637) (654) 4,296 (1,289) (110) 1,720 437 6,193 (791) 250 (92) 137 5,065 (743) 695 (1,484) 163 (1,373) 1,393 (1,174) 76 (981) 1,114 (1,123) 45 (2) (1,080) (509) 13 (1,441) (1,369) 220 (415) 625 3,972 (1,113) 2,968 (2,849) (326) (1,369) (1,080) (1,441) 220 (415) Net cash used in investing activities Cash flows from financing activities: Net change in commercial paper Net proceeds from issuance of debt Repayment of long-term debt Proceeds from issuance of common stock under share-based payment plans Cash dividend payments Repurchase of common stock Other - net Net cash used in financing activities Effect of exchange rate changes on cash Net increase (decrease) in cash and cash equivalents, including cash classified within current assets held for sale Less: Net increase/(decrease) in cash classified within current assets held for sale Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year See accompanying notes to consolidated financial statements. 44 3,972 (1,113) 118 (1,618) (4,313) (1) (2,735) (326) 114 (1,455) (3,037) (5) (5,124) (12) 625 2,968 (2,849) 139 (1,288) (3,192) (10) (3,607) 1 13 30 193 12 205 (23) (54) (77) 588 511 $ 30 511 716 $ 558 588