Home Depot vs. Lowe’s Analysis

As stated earlier, the home improvement industry takes in $755 billion annually. However, due to the softening of the housing market and declining home sales, companies in this industry has had to

First of all, return on asset (ROA) is a ratio used to measure how efficient a company generates profit using its assets, which is the invested capital. We noticed that HH’s ROA was increasing from 2006 to 2010. However, HH’s ROA for 2011 dropped dramatically from 18.41%(year

Return on equity (ROE), or measure of profitability a company can acquire using shareholder investments is an important tool (Gitman, 2015). Aetna Inc. ROE of 17.01% is comparable to market leader Humana at 10.86% (AET: AETNA INC-NEW Stock Quote & Analysis - Zacks.com, n.d.). Return on Assets (ROA) or a measure of how profitable a company is relative to total assets is a ration that must be compared within industries (Gitman, 2015). Aetna Inc. ROA at 4.7, slightly below Humana’s at 5.25, but us average for the industry (AET: AETNA INC-NEW Stock Quote & Analysis - Zacks.com,

Considering that the industry’s average ROA was as high as 8.3%, a negative ROA is not acceptable for most companies. Given its cost of capital was 11.78% in 2012, the ROA of -1.9% indicates that the earnings of Office Depot was not able to cover its financing cost so that its performance was far from adequate in 2012.

Return on assets (ROA) is an indicator of how profitable JYC is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings.

Any company that tries to move into the home improvement will have difficulty in competing with Lowes or Home Depot. This is because they have created what is known as an oligopoly in the United States. They account for the majority of the home improvement industries overall market and thus creating an economy of scale because of their purchasing power. Any company that attempts to enter this market will face a huge difference in economy of scale that they may have difficulty overcoming. Any new entrant will be going up against giants and will be forced to be a specialty store to gain any traction. Other barriers may include customer loyalty, startup capital, regional recognition, and a large selection of products.

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

The revenue/total assets ratio, also known as Asset Turnover Ratio, shows effectiveness of assets on the company 's revenue. Over the period, Wal-Mart has maintained a return of approximately $2.50 per $1 of asset. This return is comparable to the industry average of $2.25. This means that Wal-Mart is more aggressive in its uses of assets than the industry. "A high ratio compared with other firms in the same industry could indicate

ROA (short for return on assets) is a measure of a company’s profitability relative to total assets invested in the business by the owners.

2. Asset Turnover rate (Revenue/ Asset) this ratio can measure how efficiency Sears to use its asset for revenue.

Return on Assets (ROA) measures how profitably a company uses their assets by net income divided by the average total assets. Assets are either tangible or intangible items the company owns. For example, things like buildings, equipment, cash, office supplies, or accounts

There were also too many confounding factors in calculating ROA in Enager’s case. Firstly, using net book value of assets (as shown in Exhibit2) in calculating the ROA would surely put those divisions with newer assets in disadvantage. With less depreciation, divisions with newer assets will have lower ROA due to a larger denominator of assets value. The more reasonable way in this case is to use the fair market value, which can better represent the assets’ value in producing profit. Secondly, it is unreasonable to allocate corporate expenses and assets to certain divisions based on divisional revenue. Since each division had different services and products, revenue could not be the basis of allocating those corporate expenses and assets that did not reflect performance of each division. These confounding factors may be able to explain those discrepancies Randall was confused about. As such, the use of ROA in this case is an ineffective method of performance evaluation.

It is calculated as Net Income divided by Total Assets. The Return on Assets for both JP Morgan Chase and Sagicor oscillated over the four-year period; however the largest change was for Sagicor between 2012 and 2013, where the ROA increased to 1.50% from 1.29%. It then slightly increased again in 2014 to 1.62%.This meant that management was efficiently utilizing Sagicor’s asset base to make a profit. JP Morgan Chase’s and Sagicor’s ROAs ranged from 0.74% to 0.9% and 1.29% to 1.62% respectively, with both their peaks in 2012. The higher the earnings ratio, the better it is for the potential earnings for the company in the future. Both companies maintain a positive ROA ratio, which means they both have a sustainable quality of earnings to which they are generated from recurring

Inventory turnover ratio shows how effectively the company sell its stocks for the period. The higher turn that the company has will shows that the company

Alibaba’s return on assets (ROA) was 13.23%, which is an index to measure how much net profit per unit of assets creates. The higher the ratio