Company Annual Report Project Analysis via Red Co. w/write-up: Students will be assigned another company to perform the same analysis as Red Company. Once student has the results of the computerized analysis of the company, a write-up, in format of an email, is required that covers the following topics:
I. Introduction states the overall financial condition of the company.
II. Financial analysis analysis on all financial data provided.
A. Areas of strength
B. Areas of weakness
C. Additional information you would pursue before taking next steps.
IV. Conclusion - Assessment of the companys readiness to move forward.
Assume you are responding to assignment from your supervisor. Provide the solutions you arrived at and what that tells the supervisor in order for the supervisor to take action. Do NOT describe the solution process. Refer the reader to the Excel file or exhibits as necessary. Body of write-up must be as concise as possible
Horizontal Analysis of the Income Statement Enter the amounts for Fiscal 2018 for the following income statement items. Then calculate and enter the Dollar Change and the % Change from Fiscal 2017 to Fiscal 2018. Enter the dollar amounts just as they are shown on the financial statement. Round the percentages to 2 decimal places. xx.xx% Fiscal 2017 Dollar Change % Change 2016 to 2017 Fiscal 2016 Fiscal 2018 $XXX,XXX $71,309 Net Sales $68,619 $3,602 5.54 % $65,017 $xxx,xxx $48,401 Cost of Sales $46,185 $43,343 Dollar Change % Change 2017 to 2018 $XXX,XXX $2,690 3.92 % XX.xx% $xxx, XXX $2,216 4.80 % XX.xx% $XXX,XXX $474 2.11 % xx.xx% $xxx,xxx $2,969 20.56 % xx.xx% $2,842 6.56 % $XXX,XXX $22,908 Gross Margin $22,434 $21,674 $760 3.51 % $xxx,xxx $17,413 $14,444 $14,375 Selling, General and Administrative $69 0.48 % $xxx,xxx $3,394 Pre-Tax Earnings $5,489 $5,201 $288 5.54 % $XXX,XXX $1,080 Income Tax Provision $2,042 $2,108 ($66) (3.13) % $XXX,XXX ($2,095) (38.17) % xx.xx% $xxx,xxx ($962) (47.11) % XX.XX% $xxx, xxx ($1,133) (32.87) % Xx.xx% $xx.xx ($1.25) (30.56% $xxx, xxx $2,314 Net Earnings $3,447 $3,093 $354 11.45 % Sxx.xx $2.84 Basic Earnings Per Share $4.09 $3.48 $0.61 17.53 % Fix $xx.xx Cell Format ww/ Consolidated Balance Sheets (Dollars in Millions) Fiscal 2018 as of February 1, 2019 Dollars % Fiscal 2017 as of February 2, 2018 Dollars % $ $ 1.67% 0.29% 32.28% 1.95% Assets CURRENT ASSETS: Cash and Cash Equivalents Short-Term Investments Merchandise Inventory - net Other Current Assets Total Current Assets Property, Less Accumulated Depreciation Long-Term Investments Deferred Income Taxes - net Goodwill Other Assets Total Assets 511 218 12,561 938 14,228 18,432 256 294 303 995 34,508 1.48% 0.63% 36.40% 2.72% 41.23% 53.41% 0.74% 0.85% 0.88% 2.88% 100.00% 588 102 11,393 689 12,772 19,721 408 168 1,307 915 35,291 36.19% 55.88% 1.16% 0.48% 3.70% 2.59% 100.00% $ $ $ $ Liabilities and Shareholders' Equity CURRENT LIABILITIES: Short-term Borrowings Current Maturities of Long-Term Debt Accounts Payable Accrued Compensation and Employee Benefits Deferred Revenue Other Current Liabilities Total Current Liabilities Long-Term Debt, Excluding Current Maturities Deferred Revenue - Extended Protection Plans Other Liabilities Total Liabilities 722 1,110 8,279 662 1,299 2,425 14,497 14,391 827 1,149 30,864 2.09% 3.22% 23.99% 1.92% 3.76% 7.03% 42.01% 41.70% 2.40% 3.33% 89.44% 1,137 294 6,590 747 1,378 1,950 3.22% 0.83% 18.67% 2.12% 3.90% 5.53% 34.28% 44.10% 2.28% 2.71% 83.36% 12,096 15,564 803 955 29,418 SHAREHOLDERS' EQUITY Preferred Stock Common Stock Capital in Excess of Par Value Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders' Equity Total Liabilities and Shareholders' Equity 0 0.00% 401 1.16% 0 0.00% 3,452 10.00% (209) (0.61%) 3,644 10.56% 34,508 100.00% 0 0.00% 415 1.18% 22 0.06% 5,425 15.37% 11 0.03% 5,873 16.64% 35,291 100.00% $ $ dollar amounts as shown on the financial statement, which are in millions. Round the percentages to 2 decimal places. xx.xx% Fiscal 2017 Fiscal 2018 $XXX, XXX $12,561 Dollar Change % Change 2017 to 2018 $xxx, XXX $1,168 10.25 % xx.xx% Merchandise Inventory - net $11,393 $XXX,XXX $XXX,XXX $14,228 Total Current Assets $12,772 $xxx,xxx $18,432 Property, Less Accumulated Depreciation $19,721 $xxx,xxx $34,508 Total Assets $35,291 $xxx,XXX $1,110 Current Maturities of Long-Term Debt $294 $xxx,xxx $14,497 $1,456 11.40 % XX.xx% $xxx,XXX ($1,289) (6.54) % XX.XX% $XXX,XXX ($783) (2.22) % xx.xx% $xxx, XXX $816 277.55 % Xx.xx% $xxx, XXX $2,401 19.85 % XX.XX% $xxx, xxx $1,446 4.92 % xx.xx% $xxx,XXX ($1,973) (36.37) % XX.XX% $xxx,XXX ($2,229) %1% xx.xx% Total Current Liabilities $12,096 $xxx, xxx $30,864 Total Liabilities $29,418 $xxx,xxx $3,452 Retained Earnings $5,425 $XXX,XXX $3,644 Total Shareholders' Equity $5,873 a calculate the Dollar Change and the % Change from 2017 to 2018. Enter the 2018 dollar amounts as shown on the financial statement, which are in millions. Round the percentages to 2 decimal places. xx.xx% Fiscal 2017 Fiscal 2018 $xxx,XXX $12,561 Merchandise Inventory - net $11,393 $XXX,XXX $14,228 Total Current Assets $12,772 Property, Less Accumulated Depreciation $XXX,XXX $18,432 $19,721 $XXX, XXX $34,508 Total Assets $35,291 $xxx,xxx $1,110 Dollar Change % Change 2017 to 2018 $xxx,XXX $1,168 10.25 % XX.XX% $XXX, XXX $1,456 11.40 % XX.XX% $XXX, XXX ($1,289) (6.54) % XX.xx% $xxx,xxx ($783) (2.22) % xx.xx% $xxx, xxx $816 277.55 % xx.xx% $XXX, XXX $2,401 19.85 % XX.XX% $XXX,XXX $1,446 4.92 % xx.xx% $XXX, XXX ($1,973) (36.37) % XX.xx% $XXX,XXX ($2,229) (37.95)1% Current Maturities of Long-Term Debt $294 $xxx, XXX $14,497 Total Current Liabilities $12,096 $XXX,XXX $30,864 Total Liabilities $29,418 Retained Earnings $XXX,XXX $3,452 $5,425 $XXX,XXX $3,644 Total Shareholders' Equity $5,873 Equity % Dy mulupiying (Protitanty X Emiciency x Leverage). COTTOTIES DuPont Analysis 2018 2017 (Profitability) Net Profit Margin % Net Earnings $XXX, XXX $2,314 xx.xx% 3.25 % 5.02 % sales + + $71,309 $XXX,XXX X (Efficiency) Total Assets Turnover Ratio $XXX XXX $71,309 sales XX.XX 2.04 times 1.97 average total assets Beg. Yr. Amt. $35,291 $XXX,XXX End. Yr. Amt. $34,508 $XXX,XXX Average $34,900 $XXX,XXX X (Leverage) Assets-to-Equity Ratio $xxx, XXX $34,900 average total assets XX.XX 7.33 to 1 5.66 average total stockholders' equity Beg. Yr. Amt. $5,873 $XXX,XXX End. Yr. Amt. $3,644 $XXX,XXX Average $4,759 $XXX,XXX = Return on Equity % net earnings $XXX,XXX $2,314 48.62 % 56.01 % average total stockholders' equity XX.XX% $4,759 $XXX, XXX Return on Assets 2018 2017 Return on Assets % net earnings $xxx, XXX $2,314 xx.xx% 6.63 l% 9.89 % average total assets $34,900 $XXX, XXX Lowe's -- Fiscal 2018 Pg. 7 Profitability Indicators Apply the three Profitability Indicators to evaluate Lowe's profitability. Use the information in Lowe's Fiscal 2018 Income Statement to calculate the three Profitability Indicators. In the left-hand column enter the names of the items that will be used in the numerator and the denominator of the ratios. Enter the financial statement dollar amounts just as they are shown on the financial statements. Round the percentages to 2 decimal places. xx.xx% Fix xx.xx% Cell Formats 2018 2017 Gross Profit Margin % $XXX,XXX $22,908 gross margin 32.69 % 32.12 % xx.xx% net sales $71,309 $xxx,XXX Operating Profit Margin % operating income $XXX, XXX $4,018 9.60 % 5.63 % xx.xx% net sales $71,309 $xxx,xxx Net Profit Margin % net earnings $xxx,xxx $2,314 5.02 % 3.25 % xx.xx% net sales $71,309 $XXX,XXX Lowe's -- Fiscal 2018 Pg. 8 Efficiency Indicators Apply the Efficiency Indicators to drill down into Lowe's efficiency. Use the information in Lowe's Income Statement and Balance Sheets for Fiscal 2018 and Fiscal 2017 to calculate the efficiency Indicators. In the left-hand column enter the names of the financial statement items that will be used in the numerator and the denominator of the ratios. Enter the financial statement dollar amounts just as they are shown on the financial statements. Round all averages to 0 decimal places -- a whole number $xxx,xxx Round the decimal results to 2 decimal places. XX.XX Fix xx.xx Cell Formats 2018 2017 Accounts Receivable Turnover Ratio $XXX,XXX $71,309 Net Sales N/A times N/A Average Accounts Receivable, net Beg. Yr. Amt. $0 $XXX,XXX End. Yr. Amt. $0 $XXX,XXX Average $0 $XXX,XXX . Number of Days' Sales in Receivables Days in a Year (365) XXX 365 0.00 days 0.00 Accounts Receivable Turnover Ratio N/A XX.XX XX.XX Inventory Turnover Ratio cost of sales $xxx XXX $48,401 4.04 times 4.23 average merchandise inventory Beg. Yr. Amt. $11,393 $XXX, XXX End. Yr. Amt. $12,561 $XXX,XXX Average $11,977 $xxx,xxx XX.XX Number of Days' Sales in Inventory Days in a Year (365) XXX 365 90.35 days 86.29 Inventory Turnover Ratio 4.04 XX.XX . Accounts Payable Turnover Ratio cost of sales 6.51 $XXX XXX $48,401 Average $7,435 $XXX,XXX times 6.98 Beg. Yr. Amt. $6,590 $XXX,XXX average account payable End. Yr. Amt. $8,279 $xxx,xxx XX.XX Number of Days' Purchases in Accounts Payable Days in a Year (365) XXX 365 52.29 56.07 days XX.XX Accounts Payable Turnover Ratio 6.51 XX.XX Cash-to-Cash Cycle Number of Days' Sales in Inventory less Number of Days' Purchases in Accounts Payable Net Number of Days Cash is Invested in Inventory plus Number of Days' Sales in Receivables Cash-to-Cash Days XX.XX 90.35 (56.07) 34.28 0.00 34.28 86.29 (52.29) 34.00 0.00 34.00 2018 2017 Fixed Asset Turnover Ratio $XXX XXX $71,309 net sales 3.74 times 3.46 average net fixed assets Beg. Yr. Amt. $19,721 $xxx, XXX End. Yr. Amt. $18,432 $XXX,XXX Average $19,077 $XXX,XXX XX.XX Leverage Indicators (at year-end) Interest Coverage Use the information in Lowe's 2018 Balance Sheet and Income Statement to calculate the two "year-end" Leverage Indicators and the Times Interest Earned Ratio. In the left-hand column enter the names of the items that will be used in the numerator and the denominator of the ratios. Enter the financial statement dollar amounts just as they are shown on the financial statements. Round the percentages to 2 decimal places. xx.xx% Fix xx.xx% and xx.xx Round the decimal results to 2 decimal places. XX.XX Cell Formats 2018 2017 Debt % total liabilites $XXX,XXX $30,864 83.36 % 89.44 % XX.xx% total assets $34,508 $XXX,XXX Debt-to-Equity Ratio total liabilites $XXX,XXX $30,864 8.47 to 1 5.01 total shareholders' equity XX.XX $3,644 $XXX, XXX Times Interest Earned Ratio Operating Income $XXX, XXX $4,018 6.44 Itimes 10.40 Interest-net XX.XX $624 $XXX, XXX Liquidity Indicators Use the information in Lowe's 2018 Balance Sheet to calculate the three Liquidity Indicators. In the left-hand column enter the names of the items that will be used in the calculation. Enter the financial statement dollar amounts just as they are shown on the Balance Sheet. Round the decimal results to 2 decimal places. XX.XX Fix xx.xx Cell Formats 2018 2017 Working Capital current assets current liabilites $XXX,XXX $14,228 (14,497) ($269) Working Capital $676 Current Ratio $xxx,XXX $14,228 current assets 0.98 to 1 1.06 current liabilites XX.XX $14,497 $XXX,XXX (Acid Test Ratio) Quick Ratio $XXX.XXX $729 Cash and Near-Cash Assets 0.05 to 1 0.06 current liabilites . $14,497 $XXX, XXX Statement of Cash Flows Indicators Use the information in Lowe's 2018 Consolidated Statement of Cash Flows to calculate the three Statement of Cash Flows Indicators. In the left-hand column enter the names of the items that will be used in the calculation. Enter the financial statement dollar amounts in millions of dollars as shown on the Consolidated Statement of Cash Flows. Round the decimal results to 2 decimal places. XX.XX Fix xx.xx Cell Formats 2018 2017 (Quality of Income Ratio) Cash Flow to Net Income Ratio net cash provided by operating activities $XXX,XXX $6,193 1.47 2.68 to 1 XX.XX net earning $XXX, XXX (Cash Flow Adequacy Ratio) Cash Flow to Capital Expenditures Ratio net cash provided by operating activites $XXX.XXX $6,193 4.70 5.64 to 1 XX.XX Net Cash Paid to Purchase PP&E $1,098 $XXX,XXX Free Cash Flow net cash provided by operating activites Net Cash Paid to Purchase PP&E cash dividends payment Free Cash Flow $XXX.XXX $6,193 (1,098) (3,037) $2,058 $2,699 2018 2017 Dividend Payout % total dividends decleared $XXX, XXX $1,500 38.41 % 64.82 % XX.XX% net earnings $2,314 $XXX,XXX Year-End Closing Market Price of 1 Common Share The Year-End Closing Market Price of 1 share of Lowe's Common Stock is not given in Lowe's annual report. The Year-End Closing Market Price is used in the two calculations below. The last day in Lowe's 2018 fiscal year was Friday, Feb. 1, 2019. Lowe's common stock trades on the New York Stock Exchange (NYSE). On the NYSE, Lowe's year-end closing market price on Friday, Feb. 1, 2019 was $97.11. Enter that price in the box below. 2018 Year-End Closing Market Price of 1 Common Share: $97.11 $xx.xx 2018 2017 (PE Ratio) Price-Earnings Ratio year-end closing market price of 1 common share $xx.xx $97.11 24.82 34.19 times XX.XX Basic earnings per common share $2.84 $xx.xx Dividend Yield % Cash dividends per share $xx.xx $1.85 1.56 % 1.91 1% XX.XX% year-end closing market price 1 common share $97.11 $xx.xx Vertical Analysis of the Income Statement (Common-Size Statements) Use the data from Lowe's Consolidated Statements of Earnings to fill in Fiscal 2018 below. Enter the amounts exactly as they are shown on the financial statement, which are in millions. Lowe's Consolidated Statements of Earnings (Dollars in Millions) Fiscal 2018 Fiscal 2017 ended February 1, 2019 ended February 2, 2018 Dollars % Dollars % Fiscal 2016 ended February 3, 2017 Dollars % $ $ $ 71,309 100.00% 48,401 67.88% 22,908 32.12% 68,619 100.00% 46,185 67.31% 22,434 32.69% 65,017 100.00% 43,343 66.66% 21,674 33.34% Net Sales Cost of Sales Gross Margin Expenses: Selling, General and Admin. Depreciation and Amortization Operating Income Interest - net Loss on Extinguishment of Debt Pre-Tax Earnings Income Tax Provision 17,413 1,477 4,018 624 0 3,394 24.42% 2.07% 5.63% 0.88% 0.00% 4.76% 14,444 1,404 6,586 633 464 5,489 21.05% 2.05% 9.60% 0.92% 0.68% 8.00% 14,375 1,453 5,846 645 0 5,201 22.11% 2.23% 8.99% 0.99% 0.00% 8.00% 1,080 1.51% 2,042 2.98% 2,108 3.24% Net Earnings $ 2,314 3.25% $ 3,447 5.02% $ 3,093 4.76% Basic Earnings per Common Share $2.84 $4.09 $3.48 ** % columns may not add-up due to rounding Horizontal Analysis of the Income Statement Enter the amounts for Fiscal 2018 for the following income statement items. Then calculate and enter the Dollar Change and the % Change from Fiscal 2017 to Fiscal 2018. Enter the dollar amounts just as they are shown on the financial statement. Round the percentages to 2 decimal places. xx.xx% Fiscal 2017 Dollar Change % Change 2016 to 2017 Fiscal 2016 Fiscal 2018 $XXX,XXX $71,309 Net Sales $68,619 $3,602 5.54 % $65,017 $xxx,xxx $48,401 Cost of Sales $46,185 $43,343 Dollar Change % Change 2017 to 2018 $XXX,XXX $2,690 3.92 % XX.xx% $xxx, XXX $2,216 4.80 % XX.xx% $XXX,XXX $474 2.11 % xx.xx% $xxx,xxx $2,969 20.56 % xx.xx% $2,842 6.56 % $XXX,XXX $22,908 Gross Margin $22,434 $21,674 $760 3.51 % $xxx,xxx $17,413 $14,444 $14,375 Selling, General and Administrative $69 0.48 % $xxx,xxx $3,394 Pre-Tax Earnings $5,489 $5,201 $288 5.54 % $XXX,XXX $1,080 Income Tax Provision $2,042 $2,108 ($66) (3.13) % $XXX,XXX ($2,095) (38.17) % xx.xx% $xxx,xxx ($962) (47.11) % XX.XX% $xxx, xxx ($1,133) (32.87) % Xx.xx% $xx.xx ($1.25) (30.56% $xxx, xxx $2,314 Net Earnings $3,447 $3,093 $354 11.45 % Sxx.xx $2.84 Basic Earnings Per Share $4.09 $3.48 $0.61 17.53 % Fix $xx.xx Cell Format ww/ Consolidated Balance Sheets (Dollars in Millions) Fiscal 2018 as of February 1, 2019 Dollars % Fiscal 2017 as of February 2, 2018 Dollars % $ $ 1.67% 0.29% 32.28% 1.95% Assets CURRENT ASSETS: Cash and Cash Equivalents Short-Term Investments Merchandise Inventory - net Other Current Assets Total Current Assets Property, Less Accumulated Depreciation Long-Term Investments Deferred Income Taxes - net Goodwill Other Assets Total Assets 511 218 12,561 938 14,228 18,432 256 294 303 995 34,508 1.48% 0.63% 36.40% 2.72% 41.23% 53.41% 0.74% 0.85% 0.88% 2.88% 100.00% 588 102 11,393 689 12,772 19,721 408 168 1,307 915 35,291 36.19% 55.88% 1.16% 0.48% 3.70% 2.59% 100.00% $ $ $ $ Liabilities and Shareholders' Equity CURRENT LIABILITIES: Short-term Borrowings Current Maturities of Long-Term Debt Accounts Payable Accrued Compensation and Employee Benefits Deferred Revenue Other Current Liabilities Total Current Liabilities Long-Term Debt, Excluding Current Maturities Deferred Revenue - Extended Protection Plans Other Liabilities Total Liabilities 722 1,110 8,279 662 1,299 2,425 14,497 14,391 827 1,149 30,864 2.09% 3.22% 23.99% 1.92% 3.76% 7.03% 42.01% 41.70% 2.40% 3.33% 89.44% 1,137 294 6,590 747 1,378 1,950 3.22% 0.83% 18.67% 2.12% 3.90% 5.53% 34.28% 44.10% 2.28% 2.71% 83.36% 12,096 15,564 803 955 29,418 SHAREHOLDERS' EQUITY Preferred Stock Common Stock Capital in Excess of Par Value Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders' Equity Total Liabilities and Shareholders' Equity 0 0.00% 401 1.16% 0 0.00% 3,452 10.00% (209) (0.61%) 3,644 10.56% 34,508 100.00% 0 0.00% 415 1.18% 22 0.06% 5,425 15.37% 11 0.03% 5,873 16.64% 35,291 100.00% $ $ dollar amounts as shown on the financial statement, which are in millions. Round the percentages to 2 decimal places. xx.xx% Fiscal 2017 Fiscal 2018 $XXX, XXX $12,561 Dollar Change % Change 2017 to 2018 $xxx, XXX $1,168 10.25 % xx.xx% Merchandise Inventory - net $11,393 $XXX,XXX $XXX,XXX $14,228 Total Current Assets $12,772 $xxx,xxx $18,432 Property, Less Accumulated Depreciation $19,721 $xxx,xxx $34,508 Total Assets $35,291 $xxx,XXX $1,110 Current Maturities of Long-Term Debt $294 $xxx,xxx $14,497 $1,456 11.40 % XX.xx% $xxx,XXX ($1,289) (6.54) % XX.XX% $XXX,XXX ($783) (2.22) % xx.xx% $xxx, XXX $816 277.55 % Xx.xx% $xxx, XXX $2,401 19.85 % XX.XX% $xxx, xxx $1,446 4.92 % xx.xx% $xxx,XXX ($1,973) (36.37) % XX.XX% $xxx,XXX ($2,229) %1% xx.xx% Total Current Liabilities $12,096 $xxx, xxx $30,864 Total Liabilities $29,418 $xxx,xxx $3,452 Retained Earnings $5,425 $XXX,XXX $3,644 Total Shareholders' Equity $5,873 a calculate the Dollar Change and the % Change from 2017 to 2018. Enter the 2018 dollar amounts as shown on the financial statement, which are in millions. Round the percentages to 2 decimal places. xx.xx% Fiscal 2017 Fiscal 2018 $xxx,XXX $12,561 Merchandise Inventory - net $11,393 $XXX,XXX $14,228 Total Current Assets $12,772 Property, Less Accumulated Depreciation $XXX,XXX $18,432 $19,721 $XXX, XXX $34,508 Total Assets $35,291 $xxx,xxx $1,110 Dollar Change % Change 2017 to 2018 $xxx,XXX $1,168 10.25 % XX.XX% $XXX, XXX $1,456 11.40 % XX.XX% $XXX, XXX ($1,289) (6.54) % XX.xx% $xxx,xxx ($783) (2.22) % xx.xx% $xxx, xxx $816 277.55 % xx.xx% $XXX, XXX $2,401 19.85 % XX.XX% $XXX,XXX $1,446 4.92 % xx.xx% $XXX, XXX ($1,973) (36.37) % XX.xx% $XXX,XXX ($2,229) (37.95)1% Current Maturities of Long-Term Debt $294 $xxx, XXX $14,497 Total Current Liabilities $12,096 $XXX,XXX $30,864 Total Liabilities $29,418 Retained Earnings $XXX,XXX $3,452 $5,425 $XXX,XXX $3,644 Total Shareholders' Equity $5,873 Equity % Dy mulupiying (Protitanty X Emiciency x Leverage). COTTOTIES DuPont Analysis 2018 2017 (Profitability) Net Profit Margin % Net Earnings $XXX, XXX $2,314 xx.xx% 3.25 % 5.02 % sales + + $71,309 $XXX,XXX X (Efficiency) Total Assets Turnover Ratio $XXX XXX $71,309 sales XX.XX 2.04 times 1.97 average total assets Beg. Yr. Amt. $35,291 $XXX,XXX End. Yr. Amt. $34,508 $XXX,XXX Average $34,900 $XXX,XXX X (Leverage) Assets-to-Equity Ratio $xxx, XXX $34,900 average total assets XX.XX 7.33 to 1 5.66 average total stockholders' equity Beg. Yr. Amt. $5,873 $XXX,XXX End. Yr. Amt. $3,644 $XXX,XXX Average $4,759 $XXX,XXX = Return on Equity % net earnings $XXX,XXX $2,314 48.62 % 56.01 % average total stockholders' equity XX.XX% $4,759 $XXX, XXX Return on Assets 2018 2017 Return on Assets % net earnings $xxx, XXX $2,314 xx.xx% 6.63 l% 9.89 % average total assets $34,900 $XXX, XXX Lowe's -- Fiscal 2018 Pg. 7 Profitability Indicators Apply the three Profitability Indicators to evaluate Lowe's profitability. Use the information in Lowe's Fiscal 2018 Income Statement to calculate the three Profitability Indicators. In the left-hand column enter the names of the items that will be used in the numerator and the denominator of the ratios. Enter the financial statement dollar amounts just as they are shown on the financial statements. Round the percentages to 2 decimal places. xx.xx% Fix xx.xx% Cell Formats 2018 2017 Gross Profit Margin % $XXX,XXX $22,908 gross margin 32.69 % 32.12 % xx.xx% net sales $71,309 $xxx,XXX Operating Profit Margin % operating income $XXX, XXX $4,018 9.60 % 5.63 % xx.xx% net sales $71,309 $xxx,xxx Net Profit Margin % net earnings $xxx,xxx $2,314 5.02 % 3.25 % xx.xx% net sales $71,309 $XXX,XXX Lowe's -- Fiscal 2018 Pg. 8 Efficiency Indicators Apply the Efficiency Indicators to drill down into Lowe's efficiency. Use the information in Lowe's Income Statement and Balance Sheets for Fiscal 2018 and Fiscal 2017 to calculate the efficiency Indicators. In the left-hand column enter the names of the financial statement items that will be used in the numerator and the denominator of the ratios. Enter the financial statement dollar amounts just as they are shown on the financial statements. Round all averages to 0 decimal places -- a whole number $xxx,xxx Round the decimal results to 2 decimal places. XX.XX Fix xx.xx Cell Formats 2018 2017 Accounts Receivable Turnover Ratio $XXX,XXX $71,309 Net Sales N/A times N/A Average Accounts Receivable, net Beg. Yr. Amt. $0 $XXX,XXX End. Yr. Amt. $0 $XXX,XXX Average $0 $XXX,XXX . Number of Days' Sales in Receivables Days in a Year (365) XXX 365 0.00 days 0.00 Accounts Receivable Turnover Ratio N/A XX.XX XX.XX Inventory Turnover Ratio cost of sales $xxx XXX $48,401 4.04 times 4.23 average merchandise inventory Beg. Yr. Amt. $11,393 $XXX, XXX End. Yr. Amt. $12,561 $XXX,XXX Average $11,977 $xxx,xxx XX.XX Number of Days' Sales in Inventory Days in a Year (365) XXX 365 90.35 days 86.29 Inventory Turnover Ratio 4.04 XX.XX . Accounts Payable Turnover Ratio cost of sales 6.51 $XXX XXX $48,401 Average $7,435 $XXX,XXX times 6.98 Beg. Yr. Amt. $6,590 $XXX,XXX average account payable End. Yr. Amt. $8,279 $xxx,xxx XX.XX Number of Days' Purchases in Accounts Payable Days in a Year (365) XXX 365 52.29 56.07 days XX.XX Accounts Payable Turnover Ratio 6.51 XX.XX Cash-to-Cash Cycle Number of Days' Sales in Inventory less Number of Days' Purchases in Accounts Payable Net Number of Days Cash is Invested in Inventory plus Number of Days' Sales in Receivables Cash-to-Cash Days XX.XX 90.35 (56.07) 34.28 0.00 34.28 86.29 (52.29) 34.00 0.00 34.00 2018 2017 Fixed Asset Turnover Ratio $XXX XXX $71,309 net sales 3.74 times 3.46 average net fixed assets Beg. Yr. Amt. $19,721 $xxx, XXX End. Yr. Amt. $18,432 $XXX,XXX Average $19,077 $XXX,XXX XX.XX Leverage Indicators (at year-end) Interest Coverage Use the information in Lowe's 2018 Balance Sheet and Income Statement to calculate the two "year-end" Leverage Indicators and the Times Interest Earned Ratio. In the left-hand column enter the names of the items that will be used in the numerator and the denominator of the ratios. Enter the financial statement dollar amounts just as they are shown on the financial statements. Round the percentages to 2 decimal places. xx.xx% Fix xx.xx% and xx.xx Round the decimal results to 2 decimal places. XX.XX Cell Formats 2018 2017 Debt % total liabilites $XXX,XXX $30,864 83.36 % 89.44 % XX.xx% total assets $34,508 $XXX,XXX Debt-to-Equity Ratio total liabilites $XXX,XXX $30,864 8.47 to 1 5.01 total shareholders' equity XX.XX $3,644 $XXX, XXX Times Interest Earned Ratio Operating Income $XXX, XXX $4,018 6.44 Itimes 10.40 Interest-net XX.XX $624 $XXX, XXX Liquidity Indicators Use the information in Lowe's 2018 Balance Sheet to calculate the three Liquidity Indicators. In the left-hand column enter the names of the items that will be used in the calculation. Enter the financial statement dollar amounts just as they are shown on the Balance Sheet. Round the decimal results to 2 decimal places. XX.XX Fix xx.xx Cell Formats 2018 2017 Working Capital current assets current liabilites $XXX,XXX $14,228 (14,497) ($269) Working Capital $676 Current Ratio $xxx,XXX $14,228 current assets 0.98 to 1 1.06 current liabilites XX.XX $14,497 $XXX,XXX (Acid Test Ratio) Quick Ratio $XXX.XXX $729 Cash and Near-Cash Assets 0.05 to 1 0.06 current liabilites . $14,497 $XXX, XXX Statement of Cash Flows Indicators Use the information in Lowe's 2018 Consolidated Statement of Cash Flows to calculate the three Statement of Cash Flows Indicators. In the left-hand column enter the names of the items that will be used in the calculation. Enter the financial statement dollar amounts in millions of dollars as shown on the Consolidated Statement of Cash Flows. Round the decimal results to 2 decimal places. XX.XX Fix xx.xx Cell Formats 2018 2017 (Quality of Income Ratio) Cash Flow to Net Income Ratio net cash provided by operating activities $XXX,XXX $6,193 1.47 2.68 to 1 XX.XX net earning $XXX, XXX (Cash Flow Adequacy Ratio) Cash Flow to Capital Expenditures Ratio net cash provided by operating activites $XXX.XXX $6,193 4.70 5.64 to 1 XX.XX Net Cash Paid to Purchase PP&E $1,098 $XXX,XXX Free Cash Flow net cash provided by operating activites Net Cash Paid to Purchase PP&E cash dividends payment Free Cash Flow $XXX.XXX $6,193 (1,098) (3,037) $2,058 $2,699 2018 2017 Dividend Payout % total dividends decleared $XXX, XXX $1,500 38.41 % 64.82 % XX.XX% net earnings $2,314 $XXX,XXX Year-End Closing Market Price of 1 Common Share The Year-End Closing Market Price of 1 share of Lowe's Common Stock is not given in Lowe's annual report. The Year-End Closing Market Price is used in the two calculations below. The last day in Lowe's 2018 fiscal year was Friday, Feb. 1, 2019. Lowe's common stock trades on the New York Stock Exchange (NYSE). On the NYSE, Lowe's year-end closing market price on Friday, Feb. 1, 2019 was $97.11. Enter that price in the box below. 2018 Year-End Closing Market Price of 1 Common Share: $97.11 $xx.xx 2018 2017 (PE Ratio) Price-Earnings Ratio year-end closing market price of 1 common share $xx.xx $97.11 24.82 34.19 times XX.XX Basic earnings per common share $2.84 $xx.xx Dividend Yield % Cash dividends per share $xx.xx $1.85 1.56 % 1.91 1% XX.XX% year-end closing market price 1 common share $97.11 $xx.xx Vertical Analysis of the Income Statement (Common-Size Statements) Use the data from Lowe's Consolidated Statements of Earnings to fill in Fiscal 2018 below. Enter the amounts exactly as they are shown on the financial statement, which are in millions. Lowe's Consolidated Statements of Earnings (Dollars in Millions) Fiscal 2018 Fiscal 2017 ended February 1, 2019 ended February 2, 2018 Dollars % Dollars % Fiscal 2016 ended February 3, 2017 Dollars % $ $ $ 71,309 100.00% 48,401 67.88% 22,908 32.12% 68,619 100.00% 46,185 67.31% 22,434 32.69% 65,017 100.00% 43,343 66.66% 21,674 33.34% Net Sales Cost of Sales Gross Margin Expenses: Selling, General and Admin. Depreciation and Amortization Operating Income Interest - net Loss on Extinguishment of Debt Pre-Tax Earnings Income Tax Provision 17,413 1,477 4,018 624 0 3,394 24.42% 2.07% 5.63% 0.88% 0.00% 4.76% 14,444 1,404 6,586 633 464 5,489 21.05% 2.05% 9.60% 0.92% 0.68% 8.00% 14,375 1,453 5,846 645 0 5,201 22.11% 2.23% 8.99% 0.99% 0.00% 8.00% 1,080 1.51% 2,042 2.98% 2,108 3.24% Net Earnings $ 2,314 3.25% $ 3,447 5.02% $ 3,093 4.76% Basic Earnings per Common Share $2.84 $4.09 $3.48 ** % columns may not add-up due to rounding
