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We are comparing The Home Depot, Inc. and Lowe's Companies, Inc., the two giant retailers in construction products and services, regarding their inventory turns and
We are comparing The Home Depot, Inc. and Lowe's Companies, Inc., the two giant retailers in construction products and services, regarding their inventory turns and inventory costs. You need to find official corporate data for 2015 to fill in the first part of the table below. Specifically, you need to locate annual reports and 10-K fillings for 2015 as follows: The Home Depot, Inc.: Lowe's Companies, Inc.: Note that: Gross profit = Net sales - COGS; and Gross profit margin = Gross profit/Net Sales. Assume that the average annual inventory holding cost rate is 32% for both companies; price and inventory turns are independent; and there are 365 days of operations in a year. For the following parts, show equations and calculations, and copy and complete the above table. What is the average number of days that a product typically stays in the two companies' inventories until sold (inventory duration)? What are the inventory turns a year at these two retailers? What are the per-unit inventory cost rates at the two companies? (%, 2 decimals) Regarding equivalent cordless drills with the same unit cost of $125, which retailer has the lower inventory holding cost and by how much? (Dollar amounts) Find the average gross profit on an inventory merchandise investment of $125. Using your result in part (e), find the immediate gross profit (gross profit minus inventory holding cost). Which company has the higher immediate gross profit
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