HA206 Module 3: Ratio Analysis Worksheet with Examples
Directions:
Complete the table below. 1.
Calculate the ratios for Lowe’s and Home Depot. To do this, you will need to search online to locate the latest 2 annual financial statements for these companies (don’t use the TTM one). a.
Please note that for most ratios, you will only need to use the latest annual financial statement, but for some you may need to calculate the average which will require using the latest 2. b.
Be sure to show your work.
c.
You can assume that preferred dividends are 0 for any calculations even if they are not actually 0.
2.
For each ratio, note which one of the companies has the better ratio and why it is better. 3.
Paste a screenshot of the price for each company at the end of the worksheet.
Lowe’s (LOW)
https://finance.yahoo.com/quote/
LOW/financials?p=LOW
Home Depot (HD)
https://finance.yahoo.com/quote/HD/
financials?p=HD
Which company’s ratio is better and why?
Working Capital Ratio (WCR)
Formula: Current Assets/Current Liabilities
Current Assets = 21,442,000
Current Liabilities = 19,511,000
WCR = 21,442,000/19,511,000 =1.10
Current assets = 32,471,000
Current liabilities = 23,110,000
WCR = 32,471,000/23,110,000 = 1.40
Home Depot has the better ratio because it is
higher meaning that it has more current assets to pay off its current liabilities.
Earnings Per Share (EPS)
Formula: Net Income/Shares Outstanding
Net Income = 17,105,000K
Shares Outstanding = 1B
EPS =17,105,000K/1B = 17.11
Price-Earnings Ratio (P/E)
Formula: Share Price/EPS
Price = 316.94
EPS = 17.11
