Write Conclusions and Recommendation for Investment
Balance sheet Income Statement NOTE: 2015 BALANCE SHEET INFORMATION SHOULD BE USED ONLY FOR RATIOS Report Date 2018 2017 2016 2015 $ in Thousands Cash & cash equivalents $511,000 $568,000 $558,000 $405,000 Short-term investments $218,000 $102,000 $100,000 $307,000 Merchandise inventory, net $12,561,000 $11,393,000 $10,458,000 $9,458,000 Other current assets $938,000 $689,000 $884,000 $391,000 Total current assets $14,228,000 $12,772,000 $12,000,000 $10,561,000 Property, less accumulated depreciation $18,432,000 $19.721,000 $19.949,000 $19,577,000 Long-term investments $256,000 $408,000 $366,000 $222,000 Deferred income taxes - net $294,000 $168,000 $222,000 $241,000 Goodwill $303,000 $1,307,000 $1.082,000 50 Other assets $995.000 $915,000 $789.000 $665.000 Total assets $34,508,000 $35,291,000 $34,408,000 $31,266,000 Liabilities Short-term borrowings $722,000 $1.137,000 $510.000 $43,000 Current maturities of long-term debt $1,110.000 $294,000 $795.000 $1,061,000 Accounts payable $8,279,000 $6.590,000 $6.651,000 $5,633,000 Accrued compensation & employee benefits $662,000 $747,000 $790,000 $820,000 Deferred revenue $1,299,000 $1,378,000 $1 253,000 $1,078,000 Other current liabilities $2,425,000 $1.950,000 $1.975,000 $1,857,000 Total current liabilities $14,497,000 $12,096,000 $11,974,000 $10,492,000 Long-term debt, excluding current maturities $14,391,000 $15,564,000 $14.394,000 $11,545,000 Deferred revenue - extended protection plans $827,000 $803,000 $763,000 $729,000 Other liabilities $1,149,000 $955,000 $843,000 $846,000 Total liabilities $30,864,000 $29,418,000 $27,974,000 $23,612,000 Stockholders' Equity Common stock $401.000 $415,000 $433,000 $455,000 Capital in excess of par value SO $22.000 Retained earnings $3,452.000 $5,425,000 $6.241,000 $7,593,000 Accumulated other comprehensive income (loss) -$209,000 $11,000 $240.000 -$394,000 Total shareholders' equity $3,644,000 $5,873,000 $6.434,000 $7,654,000 Total liabilities and stockholders' equity $34,508,000 $35,291,000 $34,408,000 $31,266,000 Additional Information "Property and Equipment, at cost Land $7,196,000 $7.414,000 $7,329,000 $7.086,000 Buildings & building improvements $18,052,000 $18,521,000 $18,147,000 $17,451,000 Equipment $10,090.000 $10.475,000 $10.978.000 $10,863,000 Construction in progress $525,000 $530,000 $464,000 $513,000 Total cost $35,863,000 $36,940,000 $36,918,000 $35,913,000 Less: accumulated depreciation $17,431,000 $17 219,000 $16,969,000 $16,336,000Balance Sheet Income Statement NOTE: 2015 BALANCE SHEET INFORMATION SHOULD BE USED ONLY FOR RATIOS Report Date 2018 2017 2016 2015 $ in Millions Current assets: Cash and cash equivalents $1,778 $3.595 $2,538 $2,216 Receivables, net $1,936 $1.952 $2.029 $1,890 Merchandise inventories $13,925 $12.748 $12.549 $11,809 Other current assets $890 $638 $608 $569 Total current assets $18,529 $18,933 $17,724 $16,484 Net property and equipment $22,375 $22,075 $21,914 $22,191 Goodwill $2,252 $2.275 $2,093 $2, 102 Other assets $847 $1,246 $1,235 $1,196 Total assets $44,003 $44,529 $42,966 $41,973 Current Liabilities: Short-term debt $1,338 $1.559 $710 $350 Accounts payable $7.755 $7 244 $7,000 $6.565 Accrued salaries and related expenses $1.506 $1.640 $1.484 $1.515 Sales taxes payable $656 $520 $508 $476 Deferred revenue $1,782 $1.805 $1.669 $1,566 Income taxes payable $11 $54 $25 $34 Current installments of long-term debt $1,056 $1.202 $542 $71 Other accrued expenses $2.611 $2.170 $2.195 $1,941 Total current liabilities $16,716 $16,194 $14,133 $12,524 Long-term debt, excluding current installments $26,807 $24.267 $22,349 520,789 Deferred income taxes $491 $440 $296 $379 Other long-term liabilities $1,867 $2.174 $1,855 $1,965 Total liabilities $45,881 $43,075 $38,633 $35,657 Common stock, par value $0.05: authorized: 10,000 shares; issued: 1,782 $89 $88 $88 Paid-in capital $10,578 $10,192 $9.787 59.347 Retained earnings $46,423 $39,935 $35.519 $30,973 Accumulated other comprehensive loss -$772 -$566 $867 -$898 Treasury stock, at cost, 677 shares at February 3, 2019 and 622 shares at -$58,196 -$48.196 $40.194 $33,194 Total stockholders' (deficit) equity $1,878 $1,454 $4,333 $6,316 Total liabilities and stockholders' equity $44,003 $44,529 $42,966 $41,973 Additional Information No allowance account is created for receivables, i.e. Net receivables is equal to gross receivables "Property and Equipment, at cost: Land $8,363 8352 58.207 8,149 Building's 18199 $18,073 $17.772 17,667 Furniture, Fixtures and Equipment 12460 11506 11,020 10.279 Leasehold Improvements 1705 1637 1.519 1.481 Construction in Progress 820 538 739 670 Capital Leases 1392 1308 1.169 1.020 Less Accumulated Depreciation and Amortization 20564 19339 18.512 17,075 Net Property and Equipment 22375 22075 21,914 22,191Balance sheet Income Statement As Reported Annual Income Statement Report Date 2018 2017 2016 Scale Thousands Thousands Thousands Net sales 71.309,000 68,619.000 65.017.000 Cost of sales 48,401,000 45,210,000 42.553,000 Gross margin 22,908,000 23,409,000 22,464,000 Selling, general & administrative expense 17,413,000 15,376,000 15.129,000 Depreciation & amortization 1,477,000 1.447,000 1,489,000 Operating income (loss) 4,018,000 6,586,000 5,846,000 Interest income (expense), net -624,000 -633,000 -645,000 Loss on extinguishment of debt 0 -464.000 0 Pre-tax earnings (losses) 3,394,000 5,489.000 5,201,000 Income tax provision 1,080,000 2,042.000 2.108,000 Net earnings 2,314,000 3,447,000 3,093,000 Additional Information Weighted average shares outstanding - basic 811,000 839,000 880,000 Cash dividends per share 1.85 1.58 1.33 Net cash flows from operating activities 6, 193,000 5,065,000 5,617,000Balance Sheet Income Statement shares in Millions, $ in Millions 2018 2017 2016 Income Statement Net Sales $108,203 $100,904 $94,595 Cost of sales 71,043 66,548 62,282 Gross profit 37,160 34,356 32,313 Operating expenses: Selling, general and administrative 19,513 17,864 17,132 Depreciation and amortization 1,870 1,811 1,754 Impairment loss 247 0 0 Total operating expenses 21,630 19,675 18,886 Operating income 15,530 14.681 13,427 Interest and other (income) expense: Interest and investment income 93 -74 -36 Interest expense 1,051 1,057 972 Other 16 0 0 Interest and other, net 974 983 936 Earnings before provision for income taxes 14,556 13,698 12,491 Provision for income taxes 3,435 5,068 4,534 Net earnings $11,121 $8,630 $7.957 Additional Information Basic weighted average common shares 1,137 1,178 1,229 Cash dividend per share 4.12 3.56 2.76 Operating cash flow for the year 13,038 12,031 9,78317 PROTECTED VIEW Be careful-files from the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View. Enable Editing C29 X V A B C D E F G H (3) Prepare ratio analyses (for 2018, 2017, and 2016) for both companies. You should include the following ratios in your computations: w Home Depot LOWES 2018 2017 2016 2018 2017 2016 5 Profitability ratios 6 Gross Profit margin 34.34% 34.05% 34.16% 32.12% 34.11% 34.55% 7 Profit margin 10.28% 8.55% 8.41% 3.25% 5.02% 4.76% 8 Return on assets 26.94% 21.25% 21.02% 5.41% 8.75% 8.25% 9 Return on equity -5246% 298% 149.44% 48.63% 56.02% 43.91% 10 Productivity 11 Inventory Turnover 5.33 5.26 5.11 4.04 1.14 4.27 12 days inventory outstanding 68.52 69.37 71.37 90.32 88.21 85.42 13 PPE Turnover 4.87 4.59 4.29 3.74 3.46 3.29 14 Asset Turnover 2.44 2.31 2.23 5.28 5.54 5.76 15 Solvency 16 Debt-to-equity -24.43 29.63 8.92 8.47 5.01 4.35 17 Times interest earned 15.94 14.93 14.35 -6.44 -10.40 -9.06 18 Return on Financial leverage 52.73 2.77 1.28 0.43 0.47 0.36 19 Liquidity 20 Current Ratio 1.11 1.17 1.25 2.38 2.92 2.87 21 Quick Ratio 0.22 0.34 0.32 0.05 0.06 0.05 22 Working capital -1878.00 1454.00 4333.00 3644000.00 5873000.00 6434000.00 23 24 25 26 27 28 29 30 31 32 33
