Financial Research Report: Lowe's Companies, Inc Essay

1936 Words Jul 30th, 2011 8 Pages
Financial Research Report: Lowe’s Companies, Inc
Strayer University

Review of Financial Research Report: This assignment is an analysis of a US publicly-traded company; its common stock could be a prospective investment. The report is due in Week 10, in needs to be at least 5 pages, and it needs to cover the following topics:
Company Overview: Conduct research and describe the company, its operations, locations, markets, and lines of business. Collect financial statements for the past three years, fiscal or calendar.
Ratio analysis: Perform trend and ratio analysis on current and fixed assets, current and long term liabilities, owner’s equity, sales revenues, EBIT, net income, and earnings per share. Project these trends
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The following financial ratios use the information provided in the previous table: Ratios | Formula | 2011 | 2010 | 2009 | Return on Assets | Net Income/Total Assets | 5.96% | 5.40% | 6.72% | Return of Equity | Net Income/Stockholders' Equity | 11.10% | 9.35% | 12.16% | Asset Turnover | Revenue/Total Assets | 1.45 | 1.43 | 1.48 | Fixed Asset Turnover | Revenue/Fixed Assets | 2.21 | 2.10 | 2.12 | Current Ratio | Current Assets/Current Liabilities | 1.40 | 1.32 | 1.15 | Debt-to-Equity | Total Debt/Total Equity | 86.06% | 73.08% | 81.04% |

Return on assets ratio declined in 2010. This is due to increased total assets in 2010 due to company's acquisition of assets. In 2011, the company had a higher return on equity, which indicates that Lowe’s was able to generate more profit from the money that shareholder invested. The sales generated relative to total assets decreased in 2010, mainly due to reduced sales in 2009 coupled with increased total assets. Fixed asset turnover has been relatively good for Lowes. The ratio indicates how well the company is able to put fixed assets to use in generating sales. Current ratio has improved over past three years indicating a strong trend for the company in its ability to pay its current liabilities with current assets. The long-term debt forms a major part of company's financing. The company reviews its
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