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Project The required tasks are detailed below: (1) Prepare vertical common-size income statements and balance sheets for both companies. Note: Use "Total Sales" and "Total Assets" as the denominators for income statement and balance sheet, respectively. Compute for 2018, 2017, and 2016. (2) Prepare horizontal analysis on income statements and balance sheets for both companies. (3) Prepare ratio analyses (for 2018, 2017, and 2016) for both companies. You should include the following ratios in your computations: Profitability ratios o Gross Profit margin O Profit margin o Return on assets o Return on equity Productivity o Accounts Receivable Turnover o Average Collection Period o Inventory Turnover o days inventory outstanding o PPE Turnover o Asset Turnover Solvency o Debt-to-equity o Times interest earned o Return on Financial leverage Liquidity o Current Ratio o Quick Ratio o Working capital (3) Comment on the analytical results of the two companies based on your work in excel. In addition to contrasting the ratios between the companies, you should interpret the numbers and make suggestions as to why the ratio of one company might be higher/lower than the other Note: General discussions of the ratios are given in our textbook, which will help you structure your comments X fx NOTE: 2015 BALANCE SHEET INFORMATION SHOULD BE USED ONLY FOR RATIOS E F B C D NOTE: 2015 BALANCE SHEET INFORMATION SHOULD BE USED ONLY FOR RATIOS 2018 2017 2016 ! 2015 2 Report Date $1,778 $1,936 $13,925 $890 $18,529 $22,375 $2,252 $847 $44,003 $3.595 $1,952 $12,748 $638 $18,933 $22,075 $2,275 $1,246 $44,529 $2.538 $2,029 $12,549 $608 $17,724 $21,914 $2,093 $1,235 $42,966 $2216 $1,890 $11,809 $569 $16,484 $22,191 $2,102 $1,196 $41,973 4 Sin Millions 5 Current assets: 6 Cash and cash equivalents 7 Receivables, net 8 Merchandise inventories 9 Other current assets 10 Total current assets 11 Net property and equipment 12 Goodwill 13 Other assets 14 Total assets 15 Current Liabilities: 16 Short-term debt 17 Accounts payable 18 Accrued salaries and related expenses 19 Sales taxes payable 20 Deferred revenue 21 Income taxes payable 22 Current installments of long-term debt 23 Other accrued expenses 24 Total current liabilities 25 Long-term debt, excluding current installments 26 Deferred income taxes 27 Other long-term liabilities 28 Total liabilities 29 Common stock, par value $0.05, authorized: 10,000 shares: is 30 Paid-in capital 31 Retained earnings 32 Accumulated other comprehensive loss 33 Treasury stock, at cost, 677 shares at February 3, 2019 and 62: 34 Total stockholders' (deficit) equity 35 Total liabilities and stockholders' equity $350 $6,565 $1,515 $476 $1,566 $34 $54 $77 $1,339 $1,559 $7,755 $7,244 $1,506 $1,640 $656 $520 $1,782 $1,805 $11 $1,056 $1,202 $2,611 $2,170 $16,716 $16,194 $26,807 $24.267 $491 5440 $1,867 $2,174 $45,881 $43,075 $89 $89 $10,578510,192 $46,423 $39,935 -$772 -$566 $58,196 $48, 196 $1,878 $1,454 $44,003 $44,529 $710 $7,000 $1,484 $508 $1,669 $25 $542 $2,195 $14,133 $22,349 $296 $1,855 $38,633 S88 5 9,787 $35,519 -5867 -$40,194 $4,333 $42,966 $1,941 $12,524 $20,789 $379 $1,965 $35,657 588 $9,347 $30,973 $898 $33.194 $6,316 $41,973 36 38 39 Additional Information 40 No allowance account is created for receivables, i.e. Net receivables is equal to gross receivables 41 42 **Property and Equipment, at cost 43 Land 44 Buildings 45 Furniture, Fixtures and Equipment 46 Leasehold Improvements 47 Construction in Progress 48 Capital Leases 49 Less Accumulated Depreciation and Amortization 50 Net Property and Equipment 8352 $18,073 11506 1637 538 $8,207 $17,772 11.020 1,519 $8,363 18199 12460 1705 820 1392 20564 22375 8.149 17,667 10.279 1,481 739 670 1308 19339 22075 1,169 18,512 21.914 1,020 17.075 22.191 Balance Sheet Income Statement 71,043 37.160 66,548 34,356 62,282 32,313 17,864 1,811 17,132 1,754 19,513 1,870 247 21,630 15,530 19,675 14,681 18,886 13,427 4 Cost of sales 5 Gross profit 6 Operating expenses: 7 Selling, general and administrative 8 Depreciation and amortization 9 Impairment loss 10 Total operating expenses 11 Operating income 12 Interest and other (income) expense: 13 Interest and investment income 14 Interest expense 15 Other 16 Interest and other, net 17 Earnings before provision for income taxes 18 Provision for income taxes 19 Net earnings -93 1,051 -74 1,057 983 974 14,556 3,435 $11,121 -36 972 0 936 12,491 4,534 $7,957 13,698 5,068 $8,630 20 1.229 21 Additional Information 22 Basic weighted average common shares 23 Cash dividend per share 24 Operating cash flow for the year 1,137 4.12 13,038 1,178 3.56 12.031 2.76 9,783 Balance Sheet Income Statement View Help File Home Insert Page Layout Formulas Data Review a & Cut Arial 10 - AA == 0 [Copy Paste 3 Format Painter BIU - 8-a A S Clipboard Font X Gener 9 Wrap Text Merge & Center - Font Alignment A52 28 Total liabilities $29,418,000 E $23,612,000 $30,864,000 $27,974,000 29 $433,000 $455,000 $0 SO $401,000 $0 $3,452,000 -$209,000 $3,644,000 $34,508,000 $415,000 $22,000 $5,425.000 $11,000 $5,873,000 $35,291,000 . $6,241,000 -$240,000 $6,434,000 $34,408,000 $7,593,000 $394,000 $7,654,000 $31,266,000 30 Stockholders' Equity 31 Common stock 32 Capital in excess of par value 33 Retained earnings 34 Accumulated other comprehensive income (loss 35 Total shareholders' equity 36 Total liabilities and stockholders' equity 37 38 Additional Information 39 **Property and Equipment, at cost: 40 Land 41 Buildings & building improvements 42 Equipment 43 Construction in progress 44 Total cost 45 Less: accumulated depreciation 46 $7,196,000 $18,052,000 $10,090,000 $525.000 $35,863.000 $17.431.000 $7.414,000 $18,521,000 $10,475,000 $530,000 $36,940,000 $17.219,000 $7,329,000 $18,147,000 $10,978,000 $464,000 $36,918,000 $16,969,000 $7,086,000 $17,451,000 $10,863,000 $513,000 $35,913,000 $16,336,000 47 AutoSave of Lowes (2).xlsx - Excel File Formulas Data Review View Help o 10 T- Home Insert Page Layout & Cut Arial L6 Copy BIU- Format Painter Clipboard Font A A E O aA EEEEEE 2 Wrap Text Merge & Alignment D22 1 As Reported Annual Income Statement 2 Report Date 3 Scale 4 Net sales 5 Cost of sales 6 Gross margin 7. Selling, general & administrative expense 8 Depreciation & amortization 9 Operating income (loss) 10 Interest income (expense), net 11 Loss on extinguishment of debt 12 Pre-tax earnings (losses) 13 Income tax provision 14 Net earnings 15 16 Additional Information 17 Weighted average shares outstanding - basic 18 Cash dividends per share 19 Net cash flows from operating activities 201 2018 2017 2016 Thousands ThousandsThousands $71,309,000 $68,619,000 $65,017,000 $48.401,000 $45,210,000 $42,553,000 $22,908,000 $23,409,000 $22,464,000 $17.413,000 $15,376,000 $15,129.000 $ 1,477,000 $ 1,447,000 $ 1,489,000 $ 4,018,000 $ 6,586,000 $ 5,846,000 $ (624,000) S (633,000) $ (645,000) $ (464,000 $ $ 3,394,000 $5,489,000 $ 5,201,000 $ 1,080,000 $ 2,042,000 $2,108,000 $ 2,314,000 $ 3,447,000 $ 3,093,000 811,000 839,000 1.85 1.58 $ 6,193,000 S 5,065,000 880,000 1.33 S 5,617,000 Project The required tasks are detailed below: (1) Prepare vertical common-size income statements and balance sheets for both companies. Note: Use "Total Sales" and "Total Assets" as the denominators for income statement and balance sheet, respectively. Compute for 2018, 2017, and 2016. (2) Prepare horizontal analysis on income statements and balance sheets for both companies. (3) Prepare ratio analyses (for 2018, 2017, and 2016) for both companies. You should include the following ratios in your computations: Profitability ratios o Gross Profit margin O Profit margin o Return on assets o Return on equity Productivity o Accounts Receivable Turnover o Average Collection Period o Inventory Turnover o days inventory outstanding o PPE Turnover o Asset Turnover Solvency o Debt-to-equity o Times interest earned o Return on Financial leverage Liquidity o Current Ratio o Quick Ratio o Working capital (3) Comment on the analytical results of the two companies based on your work in excel. In addition to contrasting the ratios between the companies, you should interpret the numbers and make suggestions as to why the ratio of one company might be higher/lower than the other Note: General discussions of the ratios are given in our textbook, which will help you structure your comments X fx NOTE: 2015 BALANCE SHEET INFORMATION SHOULD BE USED ONLY FOR RATIOS E F B C D NOTE: 2015 BALANCE SHEET INFORMATION SHOULD BE USED ONLY FOR RATIOS 2018 2017 2016 ! 2015 2 Report Date $1,778 $1,936 $13,925 $890 $18,529 $22,375 $2,252 $847 $44,003 $3.595 $1,952 $12,748 $638 $18,933 $22,075 $2,275 $1,246 $44,529 $2.538 $2,029 $12,549 $608 $17,724 $21,914 $2,093 $1,235 $42,966 $2216 $1,890 $11,809 $569 $16,484 $22,191 $2,102 $1,196 $41,973 4 Sin Millions 5 Current assets: 6 Cash and cash equivalents 7 Receivables, net 8 Merchandise inventories 9 Other current assets 10 Total current assets 11 Net property and equipment 12 Goodwill 13 Other assets 14 Total assets 15 Current Liabilities: 16 Short-term debt 17 Accounts payable 18 Accrued salaries and related expenses 19 Sales taxes payable 20 Deferred revenue 21 Income taxes payable 22 Current installments of long-term debt 23 Other accrued expenses 24 Total current liabilities 25 Long-term debt, excluding current installments 26 Deferred income taxes 27 Other long-term liabilities 28 Total liabilities 29 Common stock, par value $0.05, authorized: 10,000 shares: is 30 Paid-in capital 31 Retained earnings 32 Accumulated other comprehensive loss 33 Treasury stock, at cost, 677 shares at February 3, 2019 and 62: 34 Total stockholders' (deficit) equity 35 Total liabilities and stockholders' equity $350 $6,565 $1,515 $476 $1,566 $34 $54 $77 $1,339 $1,559 $7,755 $7,244 $1,506 $1,640 $656 $520 $1,782 $1,805 $11 $1,056 $1,202 $2,611 $2,170 $16,716 $16,194 $26,807 $24.267 $491 5440 $1,867 $2,174 $45,881 $43,075 $89 $89 $10,578510,192 $46,423 $39,935 -$772 -$566 $58,196 $48, 196 $1,878 $1,454 $44,003 $44,529 $710 $7,000 $1,484 $508 $1,669 $25 $542 $2,195 $14,133 $22,349 $296 $1,855 $38,633 S88 5 9,787 $35,519 -5867 -$40,194 $4,333 $42,966 $1,941 $12,524 $20,789 $379 $1,965 $35,657 588 $9,347 $30,973 $898 $33.194 $6,316 $41,973 36 38 39 Additional Information 40 No allowance account is created for receivables, i.e. Net receivables is equal to gross receivables 41 42 **Property and Equipment, at cost 43 Land 44 Buildings 45 Furniture, Fixtures and Equipment 46 Leasehold Improvements 47 Construction in Progress 48 Capital Leases 49 Less Accumulated Depreciation and Amortization 50 Net Property and Equipment 8352 $18,073 11506 1637 538 $8,207 $17,772 11.020 1,519 $8,363 18199 12460 1705 820 1392 20564 22375 8.149 17,667 10.279 1,481 739 670 1308 19339 22075 1,169 18,512 21.914 1,020 17.075 22.191 Balance Sheet Income Statement 71,043 37.160 66,548 34,356 62,282 32,313 17,864 1,811 17,132 1,754 19,513 1,870 247 21,630 15,530 19,675 14,681 18,886 13,427 4 Cost of sales 5 Gross profit 6 Operating expenses: 7 Selling, general and administrative 8 Depreciation and amortization 9 Impairment loss 10 Total operating expenses 11 Operating income 12 Interest and other (income) expense: 13 Interest and investment income 14 Interest expense 15 Other 16 Interest and other, net 17 Earnings before provision for income taxes 18 Provision for income taxes 19 Net earnings -93 1,051 -74 1,057 983 974 14,556 3,435 $11,121 -36 972 0 936 12,491 4,534 $7,957 13,698 5,068 $8,630 20 1.229 21 Additional Information 22 Basic weighted average common shares 23 Cash dividend per share 24 Operating cash flow for the year 1,137 4.12 13,038 1,178 3.56 12.031 2.76 9,783 Balance Sheet Income Statement View Help File Home Insert Page Layout Formulas Data Review a & Cut Arial 10 - AA == 0 [Copy Paste 3 Format Painter BIU - 8-a A S Clipboard Font X Gener 9 Wrap Text Merge & Center - Font Alignment A52 28 Total liabilities $29,418,000 E $23,612,000 $30,864,000 $27,974,000 29 $433,000 $455,000 $0 SO $401,000 $0 $3,452,000 -$209,000 $3,644,000 $34,508,000 $415,000 $22,000 $5,425.000 $11,000 $5,873,000 $35,291,000 . $6,241,000 -$240,000 $6,434,000 $34,408,000 $7,593,000 $394,000 $7,654,000 $31,266,000 30 Stockholders' Equity 31 Common stock 32 Capital in excess of par value 33 Retained earnings 34 Accumulated other comprehensive income (loss 35 Total shareholders' equity 36 Total liabilities and stockholders' equity 37 38 Additional Information 39 **Property and Equipment, at cost: 40 Land 41 Buildings & building improvements 42 Equipment 43 Construction in progress 44 Total cost 45 Less: accumulated depreciation 46 $7,196,000 $18,052,000 $10,090,000 $525.000 $35,863.000 $17.431.000 $7.414,000 $18,521,000 $10,475,000 $530,000 $36,940,000 $17.219,000 $7,329,000 $18,147,000 $10,978,000 $464,000 $36,918,000 $16,969,000 $7,086,000 $17,451,000 $10,863,000 $513,000 $35,913,000 $16,336,000 47 AutoSave of Lowes (2).xlsx - Excel File Formulas Data Review View Help o 10 T- Home Insert Page Layout & Cut Arial L6 Copy BIU- Format Painter Clipboard Font A A E O aA EEEEEE 2 Wrap Text Merge & Alignment D22 1 As Reported Annual Income Statement 2 Report Date 3 Scale 4 Net sales 5 Cost of sales 6 Gross margin 7. Selling, general & administrative expense 8 Depreciation & amortization 9 Operating income (loss) 10 Interest income (expense), net 11 Loss on extinguishment of debt 12 Pre-tax earnings (losses) 13 Income tax provision 14 Net earnings 15 16 Additional Information 17 Weighted average shares outstanding - basic 18 Cash dividends per share 19 Net cash flows from operating activities 201 2018 2017 2016 Thousands ThousandsThousands $71,309,000 $68,619,000 $65,017,000 $48.401,000 $45,210,000 $42,553,000 $22,908,000 $23,409,000 $22,464,000 $17.413,000 $15,376,000 $15,129.000 $ 1,477,000 $ 1,447,000 $ 1,489,000 $ 4,018,000 $ 6,586,000 $ 5,846,000 $ (624,000) S (633,000) $ (645,000) $ (464,000 $ $ 3,394,000 $5,489,000 $ 5,201,000 $ 1,080,000 $ 2,042,000 $2,108,000 $ 2,314,000 $ 3,447,000 $ 3,093,000 811,000 839,000 1.85 1.58 $ 6,193,000 S 5,065,000 880,000 1.33 S 5,617,000