Financial Analysis Of Home Depot And Lowe's

11 Pages 2783 Words

ainly because having the advantage of comparing two competitive entities, both of which are using similar accounting practices, allows us to analyze their financial statements through comparison and to predict their future successes and/or failures with a reasonable degree of certainty. To do so we will employ our learned knowledge and skills of accounting along with specific analytical tools applied to the financial statements. These will include, but are not limited to common financial ratios of: profitability, such as Return on Assets, Profit Margin, Total Asset Turnover, Return on Common Equity; asset utilization; short-term liquidity risk, such as Current Ratio and Operating Cash Flow to Current Liabilities; and long-term solvency risk such as Interest coverage.

After completion of the analysis we expect to be able to give a recommendation regarding the companies' financial conditions, such as one given to current and potential investors.

Significant Accounting Principles

Home Depot, Inc. and Lowe’s Companies, Inc. both ...