For your project, you are required to obtain financial statement data, calculate ratios and perform a ratio analysis for Advance Auto Parts Inc and O' Reilly Auto Parts Inc.(Please use the information in advance auto part tab and oreily automotive tab to complete the table 1&2 tab and please include graphs - Examples are in the Fina5311-SAMPLEi file. I only need the calculation on the table, the numbers, graphs, table completed, and a little explanation)

A.An in-depth comparative ratio analysis through time and against each other based on the tables and graphs (at least 2-3 additional pages. When students analyze the ratios they must explain to the reader the meaning of each ratio. Then they should analyze the trend of each ratio through time for each company and compare it to the trend of the other company's corresponding ratio. Include events in the history of a company that might explain why a ratio dropped or increased substantially. Best sources, 10-K forms or Annual reports to shareholders.

1. Using the data students obtain from WRDS.EXCEL FILE they must fill-in the two tables below. If there is no available data for the calculation of a ratio or the denominator of a ratio is zero, they should enter NA in the table for that company's ratio. If the EPSPI is negative in a year for either one of the companies again students should enter NA for the corresponding PE ratio. There is no meaning to a negative PE ratio. Accuracy should be 4 decimals (i.e in percentage format 14.32%, 5.11%, 3.00%). Where appropriately they should express the ratio as times (2.30x). They should create graphs in excel for all ratios for the two companies, i. e. for each ratio there should be a single graph showing the ratios of the two companies for years 2011-2016. They should use consistently the same colors for the ratios of each company in each of the graphs.
2. Based on the tables and graphs they should an in-depth analysis (at least two to three pages - excluding tables, graphs and references) that will compare the ratios for each company through time and against each other. If major events happened that affected a particular ratio through the examination time then students must refer to those events.

B.A short summary (less than one page) regarding the performance of the two companies.

C.The two tables and the ratio graphs

Global Company Key 145977 145977 145977 145977 145977 145977 145977 Data Date 20101231 20111231 20121231 20131231 20141231 20151231 20161231 Data Year - Fiscal 2010 2011 2012 2013 2014 2015 2016 Ticker Symbol AAP AAP AAP AAP AAP AAP AAP Company Name ADVANCE AUTO PARTS INC ADVANCE AUTO PARTS INC ADVANCE AUTO PARTS INC ADVANCE AUTO PARTS INC ADVANCE AUTO PARTS INC ADVANCE AUTO PARTS INC ADVANCE AUTO PARTS INC Adjustment Factor (Company) - Cumulative by Ex-Date 1 1 1 1 1 1 1 Current Assets - Total 2124.271 2293.82 3184.2 3989.384 4741.04 4940.746 5172.764 Assets - Total 3354.217 3655.754 4613.814 5564.774 7962.358 8134.565 8315.033 Cash 59.209 57.901 598.111 1112.471 104.671 90.782 135.178 Cash and Short-Term Investments 59.209 57.901 598.111 1112.471 104.671 90.782 135.178 Common Shares Outstanding 81.956 72.799 73.383 72.84 73.074 73.314 73.749 Earnings Per Share (Basic) - Including Extraordinary Items 4 5.21 5.29 5.36 6.75 6.45 6.22 Current Liabilities - Total 1848.049 2187.875 2559.638 2764.785 3743.066 3797.477 3676.046 Liabilities - Total 2314.843 2807.84 3403.12 4048.569 5959.446 5673.917 5398.841 Net Income (Loss) 346.053 394.682 387.67 391.758 493.825 473.398 459.622 Receivables - Total 124.227 140.007 229.866 277.595 579.825 597.788 641.252 Revenue - Total 5925.203 6170.462 6205.003 6493.814 9843.861 9737.018 9567.679 Stockholders Equity - Parent 1039.374 847.914 1210.694 1516.205 2002.912 2460.648 2916.192 Price Close - Annual - Fiscal 66.15 69.63 72.35 110.68 159.28 150.51 169.12 Global Company Key 28180 28180 28180 28180 28180 28180 28180 Data Date 20101231 20111231 20121231 20131231 20141231 20151231 20161231 Data Year - Fiscal 2010 2011 2012 2013 2014 2015 2016 Ticker Symbol ORLY ORLY ORLY ORLY ORLY ORLY ORLY Company Name O'REILLY AUTOMOTIVE INC O'REILLY AUTOMOTIVE INC O'REILLY AUTOMOTIVE INC O'REILLY AUTOMOTIVE INC O'REILLY AUTOMOTIVE INC O'REILLY AUTOMOTIVE INC O'REILLY AUTOMOTIVE INC Adjustment Factor (Company) Cumulative by Ex-Date 1 1 1 1 1 1 1 Current Assets - Total 2301.252 2607.61 2732.948 2835.201 3066.978 3010.026 3257.975 Assets - Total 5047.827 5500.501 5749.187 6067.208 6540.301 6676.684 7204.189 Cash 29.721 361.552 248.128 231.318 250.56 116.301 146.598 Cash and Short-Term Investments 29.721 361.552 248.128 231.318 250.56 116.301 146.598 Common Shares Outstanding 141.026 127.18 112.963 105.94 101.603 97.737 92.852 Earnings Per Share (Basic) - Including Extraordinary Items 3.02 3.77 4.83 6.14 7.46 9.32 10.87 Current Liabilities - Total 1228.958 1580.01 2272.865 2423.01 2830.556 3046.398 3400.649 Liabilities - Total 1838.142 2655.65 3640.88 4100.887 4521.883 4715.37 5577.053 Net Income (Loss) 419.373 507.673 585.746 670.292 778.182 931.216 1037.691 Receivables - Total 183.652 203.753 181.174 198.123 213.211 233.687 279.379 Revenue - Total 5397.525 5788.816 6182.184 6649.237 7216.081 7966.674 8593.096 Stockholders Equity - Parent 3209.685 2844.851 2108.307 1966.321 2018.418 1961.314 1627.136 Price Close - Annual - Fiscal 60.42 79.95 89.42 128.71 192.62 253.42 278.41 Table 1 Liquidity, financial leverage and asset utilization ratios for Advance Auto Parts Inc. and O' Reilly Auto Parts Companie O' Reilly Advance Auto Parts Fiscal Year Auto Parts Quick Quick Ratio Ratio Advance Auto Parts Cash Ratio O' Reilly Advance O' Reilly Auto Parts Auto Parts Auto Parts Cash Debt to Debt to Ratio Equity Ratio Equity Ratio Advance Auto Parts Days' in Receivables O' Reilly Auto Parts Days' in Receivables 2011 2012 2013 2014 2015 2016 Table 2 Profitability, and market value ratios for Advance Auto Parts Inc and O' Reilly Auto Parts Companies Inc. Fiscal Year 2011 2012 2013 2014 2015 2016 Advance Auto Parts Profit Margin Ratio O' Reilly Auto Parts Profit Margin Ratio Advance Auto Parts ROE O' Reilly Auto Parts ROE Advance Auto Parts P/E Ratio O' Reilly Auto Parts' P/E Ratio Advance Auto Parts Price-to-Sales ratio O' Reilly Auto Parts Price-to-Sales ratio O' Reilly Auto Parts Companies Inc. Advance Auto O' Reilly Auto Parts Parts ROA ROA Advance Auto Parts Inc. vs. O'Reilly Auto Parts Companies Inc. A Comparative Ratio Analysis Advance Auto Parts Inc American home improvement supplies retailing company that sells tools, construction products, and services. The Home Depot was founded by Bernard Marcus, Arthur Blank, Ron Brill, and Pat Farrah in 1978. Its headquarters are located at the Atlanta Store Support Center in Cobb County of Atlanta, Georgia. Its current CEO is Craig Menear, who has held the position since August 2014. It runs many big-box format stores through the United States (including all 50 states, the District of Columbia, Puerto Rico, the Virgin Islands, and Guam), all ten provinces of Canada, and Mexico. Currently, the Home Depot is the largest home improvement retailer in the United States, ahead of rival Lowe's. O'Reilly Auto Parts Companies Inc Lowe's Companies, Inc. is a Fortune 500 American company that operates a chain of retail home improvement and appliance stores in the United States, Canada, and Mexico. Founded in 1946 in North Wilkesboro, North Carolina, the chain has 1,840 stores in the United States, Canada, and Mexico. Lowe's is the second-largest hardware chain in the United States behind The Home Depot. Globally, Lowe's is also the second-largest hardware chain, again behind The Home Depot but ahead of the European stores B&Q and OBI. In-Depth Analysis Quick Ratio The quick ratio is a way to visualize the liquidity of a company. It is the relationship between the assets like cash and receivables vs. current liabilities. A company wants to be in a position where it can acquire money relatively easily to cover liabilities. For the past six years, the difference in quick ratio has been higher for Home Depot than for Lowe's Companies, although both can cover less than 35% of their liabilities. Home Depot's numbers stay above 0.250 while Lowe's Companies' quick ratio is closer to 0.050 in the last fiscal year. Cash Ratio If a creditor wanted to be more conservative about their decision to extend a loan to a company, they would look at the Cash Ratio, because cash is the most liquid of all assets, it provides the creditor an idea of the certainty of the company being able to pay them back. In the comparison between Home Depot and Lowe's we find that the trends are very similar to the quick ratio with Home Depot having more cash to cover its liabilities than Lowe's. As expected, the cash ratios are lower than the quick ratios, because short-term investments and receivables are taken out of the equation. Over the past six years, both companies' cash ratios have been declining with an average of 0.186 for Home Depot while the average for Lowe's Companies over the past six years is 0.063. Debt / Equity Ratio When we look at the Debt/Equity Ratio, we are comparing a company's total liabilities to the stockholder's equity. On occasion, companies will take on debt to finance projects that they believe will pay off with a greater return than to scale it organically. As we can see from our graph on Debt/Equity Ratio, Lowe's is far more conservative in their strategies than Home Depot. Lowe's D/E Ratio last year was 186.105%, the highest it has been in the past six years, but Home Depot has become more aggressive in their growth of debt going from 126.383% to 891.599% in just six years. This is a high-risk investment because the company has nearly eight times more debt than what the company is worth. Days' in Receivables When a company sells on credit, it wants to recoup their money as quickly as possible. The days' in receivables value tracks on average, how long it takes the company to collect the funds from their sales on credit. In the data acquired from WRDS, Lowe's doesn't report values for Accounts Receivable without which we cannot calculate Days' in Receivables. Even though we cannot compare the ratios, Home Depot has had an average of 6.979 days in receivables over the past six years. Although in the past two years, the collection time has increased. One possibility for this is larger, and more frequent sales on credit to large corporations that require multi-level approvals for funds distribution. Also, the implementation of more scrutinized spending by Home Depot's customer corporations, may add time to their days in receivables value. ROA The ROA ratio gives investors an idea of how effectively the company is converting the money it must invest in net income. The higher the ROA number, the better, because the company is earning more money on less investment. Over the past six years, both companies have improved their ROA, but Home Depot's values are higher than Lowe's Companies', and because they are the same type of business, we can use this ratio to compare the two. Home Depot has improved their ROA from 9.583% to 18.519% over the past six years, whereas Lowe's Companies has improved their ROA from 5.480% in 2011 to 8.983% in 2016. This means that Home Depot is doing a better job of converting its investments into profit, which is highly desirable to an investor. Profit Margin When examining a company's balance sheet, high revenues may not necessarily indicate high profit margins, because it doesn't take into consideration the company's expenses. The profit margin ratio does a better job of this by using the net income and the revenues to decipher if the company is profitable or not. The profit margin ratio for Home Depot is higher than for Lowe's Companies. Last year Home Depot had a profit margin of 8.412% while Lowe's Companies had a profit margin of 4.754%. There are a lot of factors that may be influencing these numbers such as, the difference in expenses, low pricing strategies, low market share, low turnover rates, among others. In comparing the companies' own current profit margins to their past profit margins, we see these number increasing overall. Return on Equity Return on equity measures a company's profitability by revealing how much profit a company makes with the money stockholders have invested. By analyzing the data for the hardware companies, we see that Home Depot's strategy of acquiring liabilities at a much higher rate than its competitor, is generating positive results for their stockholders, generating ROE value up to 183.637% last year alone, which is a significant increase from their ROE number in 2011 which was 21.695%. The same can be said about the ROE values for Lowe's, they behave in the same manner as their debt to equity ratio. Their debt acquisition is modest, which results in directly proportional ROE values. Last year Lowe's had an ROE of 48.042% which is still better than their ROE in 2011 which was 11.123%. Price-Earnings Ratio The price-earnings ratio indicates the dollar amount an investor can expect to invest in a company to receive one dollar of that corporation's earnings. This is the only ratio in which Lowe's Companies perform better than Home Depot although the difference between them is only a few cents. The graph shows that both companies increased their P/E ratio in 2012, 2014, and 2015; and both companies dropped their P/E ratio in 2013 and 2016. This implies that the factors the lead to these drops are external to the company. In 2016, Home Depot took a very small lead over Lowe's for the first time in five years. Home Depot's P/E ratio last year was 21.264 while Lowe's Companies' P/E ratio was 21.000 Price-to-Sales Ratio The price-to-sales ratio is a gauge of the value placed on each dollar of a corporation's sales or revenues. It basically compares a company's stock value to its revenues. The PSR is a valuation ratio. A lower than average PSR value may indicate undervaluing, while a higher than average PSR value may indicate overvaluing. The average PSR value is determined by other the lot of companies that comprise a sector. This makes irrelevant to compare a car dealership's PSR to a bakery's PSR. Since both the companies we are analyzing are in the hardware sector, it is valid to compare the two. With the numbers rising year to year, Home Depot's PSR of 1.750 in 2016 is significantly higher than Lowe's PSR value of 0.973 in the same year. One reason for this may be the sheer size difference between both corporations, another reason may be that Home Depot's risky strategies are successful and are generating positive results, while Lowe's Companies are generating modest results. I would expect this PSR value drop if one of Home Depot's volatile financial tactics, backfires. Either way, in business this ratio is constantly changing which is why most calculations are done on a trailing 12-month basis. Summary Although Lowe's Companies has been around longer than Home Depot, it ranks as the second largest hardware chain in the US and worldwide. Lowe's founder's perspective of what the company would be was, hardware stores in small-town America, but with the arrival of Home Depot, the mega store set out to be the biggest, Lowe's had to adapt in order to survive. Examining the ratio graphs for both businesses you will see a trend, both companies perform almost identically with the difference being the magnitude. The D/E Ratio and the ROE graphs are extremely similar which shows that an increase in liabilities and the increase in net income are directly dependent of each other, when done at a strategic time. It is important to note that these ratios, independent from one another, cannot depict an accurate financial landscape for any company. It is not until you analyze all the ratios together that a proper financial assessment can be made. In our hardware businesses' financial profile, we see that Lowe's Companies' strategies are safer than those of Home Depot. Lowe's changes throughout the years have been modest to say the least. On the other hand, Home Depot started with the hunger to be the biggest and the best and they figured, the bigger the risk, the bigger the reward. So far, it has paid off for Home Depot which currently leads the hardware market. Tables Graphs