A.These two companies are both home improvement retail stores. This industry has a strong relationship with the macroeconomy. When the economy is growing, there are usually more home improvement projects because people have more disposable income. The housing market may also influence the revenue of the industry because developers are building new homes and apartment buildings.
In the home improvement industry, Home Depot and Lowe’s are actually the two biggest dominators. Home Depot ranks number one, and Lowe’s ranks number two. Shares are about 27.2% and 18.4%. They are also the most important rivals of each other. In the US, Menard's, the third-largest, is also their competitor. Globally, European stores B&Q and OBI are also competitors. …show more content…
In the ROE breakdown of the subcomponents, nearly every ratio between the two firms over the three fiscal years is fairly equal.
◾The income statements show that Home Depot’s sales are consistently over $20,000(mill) more than Lowe’s. Overall, Home Depot’s return on equity is significantly higher than that of Lowe’s, showing that the former firm is much more profitable with the amount that has been invested. This could mean that while most activities between the two firms remain somewhat equal, Lowe’s has a more difficult time justifying the cost of their SG&A, while Home Depot is more efficient at turning sales into a profit.
F. Home Depot’s inventory turnover and payables turnover bring the company an average holding period of under 80 days and an average time to payment of 40 days, whereas Lowes’ are more than 90 days (INVT) and 51 days (APT), respectively. However, due to Lowes’s agreement with GE Capital Retail (GECR) in which GECR purchases all accounts receivable at face value, Lowe’s has overall faster cash conversion than Home Depot by 2.5 days. Home Depot consistently has quicker total asset turnover year over year as compared to
In the home improvement industry, Home Depot and Lowe’s are actually the two biggest dominators. Home Depot ranks number one, and Lowe’s ranks number two. Shares are about 27.2% and 18.4%. They are also the most important rivals of each other. In the US, Menard's, the third-largest, is also their competitor. Globally, European stores B&Q and OBI are also competitors. …show more content…
In the ROE breakdown of the subcomponents, nearly every ratio between the two firms over the three fiscal years is fairly equal.
◾The income statements show that Home Depot’s sales are consistently over $20,000(mill) more than Lowe’s. Overall, Home Depot’s return on equity is significantly higher than that of Lowe’s, showing that the former firm is much more profitable with the amount that has been invested. This could mean that while most activities between the two firms remain somewhat equal, Lowe’s has a more difficult time justifying the cost of their SG&A, while Home Depot is more efficient at turning sales into a profit.
F. Home Depot’s inventory turnover and payables turnover bring the company an average holding period of under 80 days and an average time to payment of 40 days, whereas Lowes’ are more than 90 days (INVT) and 51 days (APT), respectively. However, due to Lowes’s agreement with GE Capital Retail (GECR) in which GECR purchases all accounts receivable at face value, Lowe’s has overall faster cash conversion than Home Depot by 2.5 days. Home Depot consistently has quicker total asset turnover year over year as compared to