Go to Morningstar.com . At the top of the page, in the middle, start to enter "Home Depot" in the box just before "Quote". As you start to type the company name a list of potential selections will pop up. Keep typing until you see "Home Depot" and then select it and hit the "Quote" button. Once you enter the company name or symbol, scroll down until you locate a tab called, Financials, then click on the statement that you would like to view. Finally, click on the "%" button to view the financials using vertical analysis Then, you can use the data provided to answer the following questions. For a video explanation, please view https://www.youtube.com/watch?v=qFDPmMLHOMo [+].

Then, answer the following questions related to Home Depot. Once you have entered the information for the Home Depot, you'll have to repeat the above steps to answer the questions for Lowe's Companiesas well. There is also a button just above the Performance tab that you can use to print the page if you prefer. Another option is to print off this assignment and complete it on paper before returning to enter your answers.

Let's begin by viewing the Income Statement of the Home Depot. Remember, under vertical analysis, Revenues will be set equal to 100% and then every component of the Income Statement will be shown as a percentage of Revenues.

Please complete the following chart (when answering the problems, please omit the % sign and enter 2 decimal places).

We will focus our attention on the Vertical Analysis of the Income Statement for the year ended January 2016.

Income Statement Vertical Analysis

Home Depot

Lowes

Cost of Revenue (Cost of Goods Sold)

Gross Profit

Total Operating Expenses

Net Income

Financials
	2007-01	2008-01	2009-01	2010-01	2011-01	2012-01	2013-01	2014-01	2015-01	2016-01	TTM
Revenue USD Mil	79,022	77,349	71,288	66,176	67,997	70,395	74,754	78,812	83,176	88,519	93,368
Gross Margin %	33.6	33.6	33.7	33.9	34.3	34.5	34.6	34.2	34.1	34.2	34.2
Operating Income USD Mil	8,866	7,242	4,359	4,803	5,839	6,661	7,766	9,166	10,469	11,774	13,049
Operating Margin %	11.2	9.4	6.1	7.3	8.6	9.5	10.4	11.6	12.6	13.3	14
Net Income USD Mil	5,761	4,395	2,260	2,661	3,338	3,883	4,535	5,385	6,345	7,009	7,684
Earnings Per Share USD	2.79	2.37	1.34	1.57	2.01	2.47	3	3.76	4.71	5.46	6.17
Dividends USD	0.68	0.9	0.9	0.9	0.94	1.04	1.16	1.56	1.88	2.36	2.66
Payout Ratio % *		39.6	50.3	65.6	47	42.1	41.1	39.5	40.9	41.9	43.1
Shares Mil	2,062	1,856	1,686	1,692	1,658	1,570	1,511	1,434	1,346	1,283	1,247
Book Value Per Share * USD		10.48	10.85	11.41	11.64	11.64	11.86	10.09	7.67	6.09	4.62
Operating Cash Flow USD Mil	7,661	5,727	5,528	5,125	4,585	6,651	6,975	7,628	8,242	9,373	9,926
Cap Spending USD Mil	-3,542	-3,558	-1,847	-966	-1,096	-1,221	-1,312	-1,389	-1,442	-1,503	-1,565
Free Cash Flow USD Mil	4,119	2,169	3,681	4,159	3,489	5,430	5,663	6,239	6,800	7,870	8,361
Free Cash Flow Per Share * USD		1.17	1.73	2.6	2.1	3.46	3.32	4.24	4.74	6.04
Working Capital USD Mil	5,069	1,968	2,209	3,537	3,357	5,144	3,910	4,530	4,033	4,467
Key Ratios -> Profitability
Margins % of Sales	2007-01	2008-01	2009-01	2010-01	2011-01	2012-01	2013-01	2014-01	2015-01	2016-01	TTM
Revenue	100	100	100	100	100	100	100	100	100	100	100
COGS	66.41	66.39	66.35	66.13	65.73	65.53	65.43	65.85	65.87	65.81	65.82
Gross Margin	33.59	33.61	33.65	33.87	34.27	34.47	34.57	34.15	34.13	34.19	34.18
SG&A	20.38	22.05	25.03	24.03	23.31	22.77	22.08	20.46	19.57	18.98	18.34
R&D
Other	1.99	2.2	2.5	2.58	2.38	2.23	2.1	2.06	1.97	1.91	1.86
Operating Margin	11.22	9.36	6.11	7.26	8.59	9.46	10.39	11.63	12.59	13.3	13.98
Net Int Inc & Other	-0.46	-0.8	-1.08	-1.24	-0.83	-0.84	-0.73	-0.89	-0.59	-0.85	-1
EBT Margin	10.76	8.56	5.04	6.02	7.75	8.62	9.66	10.74	11.99	12.45	12.97
Profitability	2007-01	2008-01	2009-01	2010-01	2011-01	2012-01	2013-01	2014-01	2015-01	2016-01	TTM
Tax Rate %	38.11	36.4	35.6	34.2	36.7	36.01	37.2	36.4	36.4	36.4	36.56
Net Margin %	6.34	5.68	3.17	4.02	4.91	5.52	6.07	6.83	7.63	7.92	8.23
Asset Turnover (Average)	1.88	1.6	1.67	1.61	1.68	1.75	1.83	1.93	2.07	2.14	2.11
Return on Assets %	11.91	9.1	5.29	6.49	8.24	9.63	11.11	13.2	15.77	16.99	17.33
Financial Leverage (Average)	2.09	2.5	2.32	2.11	2.12	2.26	2.31	3.24	4.29	6.74	7.92
Return on Equity %	22.18	20.56	12.74	14.32	17.44	21.11	25.42	35.55	58.09	89.64	116.06
Return on Invested Capital %	17.69	14.12	8.78	10.62	12.7	14.87	17.18	20.89	24.77	27.66	29.06
Interest Coverage			6.75	6.89	10.95	11.01	12.43	12.91	13.02	12.99	13.51
Key Ratios -> Growth
	2007-01	2008-01	2009-01	2010-01	2011-01	2012-01	2013-01	2014-01	2015-01	2016-01	Latest Qtr
Revenue %
Year over Year		-14.85	-7.84	-7.17	2.75	3.53	6.19	5.43	5.54	6.42	6.12
3-Year Average		1.9	-4.37	-10.02	-4.2	-0.42	4.15	5.04	5.72	5.8
5-Year Average		5.84	1.92	-1.97	-3.56	-4.97	-0.68	2.03	4.68	5.42
10-Year Average		12.34	8.96	5.58	4.05	2.77	2.53	1.97	1.3	0.83
Operating Income %
Year over Year		-25.13	-39.81	10.19	21.57	14.08	16.59	18.03	14.22	12.47	11.37
3-Year Average		-2.96	-22.5	-20.81	-6.93	15.18	17.37	16.22	16.27	14.88
5-Year Average		4.43	-8.63	-9.53	-9.01	-7.19	1.41	16.03	16.86	15.06
10-Year Average		13.64	5.06	2.38	3.37	3.05	2.91	2.96	2.82	2.32
Net Income %
Year over Year		-23.71	-48.58	17.74	25.44	16.33	16.79	18.74	17.83	10.46
3-Year Average		-4.21	-27.12	-22.7	-8.76	19.77	19.45	17.28	17.78	15.62
5-Year Average		3.71	-12.09	-11.86	-10.58	-7.59	0.63	18.96	18.98	15.99
10-Year Average		14.25	3.42	1.38	2.61	2.46	2.16	2.27	2.41	1.84
EPS %
Year over Year		-15.05	-43.46	17.16	28.03	22.89	21.46	25.33	25.27	15.92	18.52
3-Year Average		1.6	-21.02	-17.44	-5.34	22.61	24.09	23.22	24.01	22.09
5-Year Average		8.72	-6.55	-7.03	-5.87	-2.41	4.83	22.92	24.57	22.12
10-Year Average		16.38	6.61	4.61	6.21	6.71	6.76	7.18	7.62	7.22
Key Ratios -> Cash Flow
Cash Flow Ratios	2007-01	2008-01	2009-01	2010-01	2011-01	2012-01	2013-01	2014-01	2015-01	2016-01	TTM
Operating Cash Flow Growth % YOY			-347	-729			487	936	805
Free Cash Flow Growth % YOY							429		899
Cap Ex as a % of Sales	4.48	4.6	2.59	1.46	1.61	1.73	1.76	1.76	1.73	1.7	1.68
Free Cash Flow/Sales %	5.21	2.8	5.16	6.28	5.13	7.71	7.58	7.92	8.18	8.89	8.95
Free Cash Flow/Net Income	0.71	0.49	1.63	1.56	1.05	1.4	1.25	1.16	1.07	1.12	1.09
Key Ratios -> Financial Health
Balance Sheet Items (in %)	2007-01	2008-01	2009-01	2010-01	2011-01	2012-01	2013-01	2014-01	2015-01	2016-01	Latest Qtr
Cash & Short-Term Investments	1.17	1.03	1.28	3.49	1.36	4.9	6.07	4.76	4.31	5.21	8.06
Accounts Receivable	6.17	2.84	2.36	2.36	2.7	3.07	3.4	3.45	3.72	4.44	4.48
Inventory	24.53	26.47	25.93	24.92	26.48	25.48	26.07	27.29	27.73	27.75	29.75
Other Current Assets	2.57	2.77	2.9	3.23	3.05	2.38	1.88	2.21	2.54	2.53	1.18
Total Current Assets	34.44	33.11	32.46	34	33.59	35.84	37.42	37.71	38.31	39.94	43.48
Net PP&E	50.91	61.99	63.73	62.5	62.45	60.34	58.58	57.62	56.88	52.15	49.08
Intangibles	12.08	2.73	2.75	2.86	2.96	2.76	2.85	3.18	3.39	4.94	4.71
Other Long-Term Assets	2.57	2.18	1.05	0.63	0.99	1.06	1.15	1.49	1.43	2.97	2.74
Total Assets	100	100	100	100	100	100	100	100	100	100	100
Accounts Payable	14.07	12.93	11.71	11.9	11.76	11.98	13.09	14.31	14.54	15.43	18.1
Short-Term Debt	0.03	4.62	4.29	2.5	2.6	0.07	3.22	0.08	0.82	1	1.22
Taxes Payable			1.52	1.15	0.95	1.02	1.2	1.01	1.17	1.2	1.61
Accrued Liabilities	6.18	6.65	6.74	6.98	6.99	7.23	7.3	7.83	8	8.13	7.83
Other Short-Term Liabilities	4.45	4.46	2.83	2.83	2.93	2.83	3.09	3.3	3.67	3.68	3.67
Total Current Liabilities	24.74	28.67	27.09	25.35	25.23	23.14	27.9	26.53	28.21	29.44	32.43
Long-Term Debt	22.28	25.68	23.48	21.19	21.7	26.55	23.06	36.26	42.23	49.09	50.2
Other Long-Term Liabilities	5.09	5.69	6.24	6.02	6	6.14	5.77	6.31	6.22	6.63	4.74
Total Liabilities	52.11	60.04	56.81	52.56	52.92	55.83	56.73	69.1	76.66	85.16	87.37
Total Stockholders' Equity	47.89	39.96	43.19	47.44	47.08	44.17	43.27	30.9	23.34	14.84	12.63
Total Liabilities & Equity	100	100	100	100	100	100	100	100	100	100	100
Liquidity/Financial Health	2007-01	2008-01	2009-01	2010-01	2011-01	2012-01	2013-01	2014-01	2015-01	2016-01	Latest Qtr
Current Ratio	1.39	1.15	1.2	1.34	1.33	1.55	1.34	1.42	1.36	1.36	1.34
Quick Ratio	0.3	0.14	0.13	0.23	0.16	0.34	0.34	0.31	0.28	0.33	0.39
Financial Leverage	2.09	2.5	2.32	2.11	2.12	2.26	2.31	3.24	4.29	6.74	7.92
Debt/Equity	0.47	0.64	0.54	0.45	0.46	0.6	0.53	1.17	1.81	3.31	3.97
Key Ratios -> Efficiency Ratios
Efficiency	2007-01	2008-01	2009-01	2010-01	2011-01	2012-01	2013-01	2014-01	2015-01	2016-01	TTM
Days Sales Outstanding	11.29	10.57	5.71	5.34	5.5	6.04	6.45	6.47	6.32	6.96	7.7
Days Inventory	72.41	87.26	86.45	86.99	84.99	82.88	78.49	77.25	74.51	71.7	76.43
Payables Period	40.02	46.51	40.72	40.39	39.12	37.87	38.18	39.65	39.06	38.76	45.41
Cash Conversion Cycle	43.68	51.32	51.43	51.94	51.37	51.05	46.75	44.07	41.77	39.9	38.72
Receivables Turnover	32.33	34.52	63.91	68.36	66.37	60.42	56.63	56.44	57.72	52.47	47.43
Inventory Turnover	5.04	4.18	4.22	4.2	4.29	4.4	4.65	4.72	4.9	5.09	4.78
Fixed Assets Turnover	3.53	2.86	2.65	2.56	2.69	2.84	3.08	3.32	3.61	3.94	4.24
Asset Turnover	1.88	1.6	1.67	1.61	1.68	1.75	1.83	1.93	2.07	2.14	2.11

__________________________________________________________________________________________________________________________________________________________________________________________________________________________________

QUESTION:

Please complete the following chart (when answering the problems, please omit the % sign and enter 2 decimal places).

We will focus our attention on the Vertical Analysis of the Income Statement for the year ended January 2016.

Income Statement Vertical Analysis	Home Depot	Lowes
Cost of Revenue (Cost of Goods Sold)
Gross Profit
Total Operating Expenses
Net Income

Thank you for the assistance. It is greatly appreciated!!!!