THE HOME DEPOT, INC. CONSOLIDATED BALANCE SHEETS February 3, 2019 January 28, 2018 $ in millions, except per share data Assets Current assets: Cash and cash equivalents Receivables, net Merchandise inventories Other current assets Total current assets Net property and equipment Goodwill Other assets Total assets 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 $ $ 1,339 7,755 1,506 656 1,782 1,559 7,244 1,640 520 1,805 Liabilities and Stockholders' Equity Current liabilities: Short-term debt Accounts payable Accrued salaries and related expenses Sales taxes payable Deferred revenue Income taxes payable Current installments of long-term debt Other accrued expenses Total current liabilities Long-term debt, excluding current installments Deferred income taxes Other long-term liabilities Total liabilities 54 1,056 2,611 16,716 26,807 491 1,867 45,881 1,202 2,170 16,194 24,267 440 2,174 43,075 Common stock, par value $0.05; authorized: 10,000 shares; issued: 1,782 at February 3, 2019 and 1,780 shares at January 28, 2018; outstanding: 1,105 shares at February 3, 2019 and 1,158 shares at January 28, 2018 Paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock, at cost, 677 shares at February 3, 2019 and 622 shares at January 28, 2018 Total stockholders' (deficit) equity Total liabilities and stockholders' equity 10,578 46,423 (772) (58,196) (1,878) 44,003 89 10,192 39,935 (566) (48,196) 1,454 44,529 Required: Use the most recent annual financial statements for Lowe's Companies, Inc. and The Home Depot, Inc. to answer the following questions: 1. Calculate the current ratio for the past two years for both firms. Do you notice any significant differences or trends? 2. Calculate the gross profit percentage for the past two years both firms. Do you notice any significant differences or trends? 3. Calculate return on assets for the most recent year for both firms. Which company earned the highest return on assets? 4. Decompose return on assets into net profit margin and total asset turnover.d 5. What insights does ROA profit driver analysis provide into the relative performance of the two companies? THE HOME DEPOT, INC. CONSOLIDATED BALANCE SHEETS February 3, 2019 January 28, 2018 $ in millions, except per share data Assets Current assets: Cash and cash equivalents Receivables, net Merchandise inventories Other current assets Total current assets Net property and equipment Goodwill Other assets Total assets 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 $ $ 1,339 7,755 1,506 656 1,782 1,559 7,244 1,640 520 1,805 Liabilities and Stockholders' Equity Current liabilities: Short-term debt Accounts payable Accrued salaries and related expenses Sales taxes payable Deferred revenue Income taxes payable Current installments of long-term debt Other accrued expenses Total current liabilities Long-term debt, excluding current installments Deferred income taxes Other long-term liabilities Total liabilities 54 1,056 2,611 16,716 26,807 491 1,867 45,881 1,202 2,170 16,194 24,267 440 2,174 43,075 Common stock, par value $0.05; authorized: 10,000 shares; issued: 1,782 at February 3, 2019 and 1,780 shares at January 28, 2018; outstanding: 1,105 shares at February 3, 2019 and 1,158 shares at January 28, 2018 Paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock, at cost, 677 shares at February 3, 2019 and 622 shares at January 28, 2018 Total stockholders' (deficit) equity Total liabilities and stockholders' equity 10,578 46,423 (772) (58,196) (1,878) 44,003 89 10,192 39,935 (566) (48,196) 1,454 44,529 Required: Use the most recent annual financial statements for Lowe's Companies, Inc. and The Home Depot, Inc. to answer the following questions: 1. Calculate the current ratio for the past two years for both firms. Do you notice any significant differences or trends? 2. Calculate the gross profit percentage for the past two years both firms. Do you notice any significant differences or trends? 3. Calculate return on assets for the most recent year for both firms. Which company earned the highest return on assets? 4. Decompose return on assets into net profit margin and total asset turnover.d 5. What insights does ROA profit driver analysis provide into the relative performance of the two companies