For this project, you will access financial ratio information on the Internet an
ID: 2460154 • Letter: F
Question
For this project, you will access financial ratio information on the Internet and prepare a comparative analysis of the companies that you research. The financial ratios that you will be analyzing, and the corresponding text pages in which information on them can be found, are: 1. Price/earnings ratio (pages 503, 504, 505, 597 and 601) 2. Earnings per share (pages 493, 503, 504, 597 and 601) 3. Net profit margin (pages 113, 114, 597, and 599) 4. Return on equity (pages 503, 504, 505, 597, 600 and 601) 5. Current ratio (pages 65, 66, 597 and 602) Be sure to read the section about each ratio on the pages indicated. Pay close attention to how the ratio is computed and what it measures (liquidity, profitability etc.). 1. Go to finance,yahoo.com 2. In the "Quote Lookup" area, type "HD". Then click on "Go"Explanation / Answer
Calculation of ratios and analysis of both the companies:
Ratios
The Home
Depots, Inc
Better
Result
Lowes
Companies, Inc
Better
Result
Return to investors
Price / Earnings ratio
1.58
X
1.12
Better result (mark with an X)
Profitability
Earnings per share
5.46
X
2.73
Better result (mark with an X)
Profitability
Net profit margin
7.92
X
4.31
Better result (mark with an X)
Return to investors
Return on equity
89.64
X
28.9
Better result (mark with an X)
Liquidity
Current ratio
1.1
X
1.01
Better result (mark with an X)
Analysis:
In overall analysis of above table between the two companies Home depot is better than the Low companies.
Ratios
The Home
Depots, Inc
Better
Result
Lowes
Companies, Inc
Better
Result
Return to investors
Price / Earnings ratio
1.58
X
1.12
Better result (mark with an X)
Profitability
Earnings per share
5.46
X
2.73
Better result (mark with an X)
Profitability
Net profit margin
7.92
X
4.31
Better result (mark with an X)
Return to investors
Return on equity
89.64
X
28.9
Better result (mark with an X)
Liquidity
Current ratio
1.1
X
1.01
Better result (mark with an X)
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