Ratio Analysis and Statement of Cash Flows
Financial ratios are "just a convenient way to summarize large quantities of financial data and to compare firms' performance" (Brealey & Myer & Marcus, 2003, p. 450). Financial ratios are very useful tools in order to determine the health of a company, help managers to make decision, and help to compare companies that belong to the same industry in order to know about their performance.
Home Depot and Lowe's are two home improvement chains in the United States. Home Depot is the leading company in this industry followed by Lowe's as the second largest. This paper uses financial ratios to compare these companies regarding operating profitability, asset utilization, and risk management in the years 2005 and 2006. The evaluation compares the performances of these stores against the industry.
Operating Profitability
Home Depot closed the fiscal year of 2006 reporting that its sales were $90.8 billion, which was a 10% increase from......
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Approximate Word Count: 1163
Approximate Pages: 5 (260 words per double-spaced page) |