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Lowe’s Companies Inc., a major competitor of The Home Depot in the home improvement business, operates over 1,700 stores. Lowe’s recently reported the following balance sheet data (in millions): a. Determine the total stockholders’ equity at the end of Years 2 and 1. b. Determine the ratio of liabilities to stockholders’ equity for Year 2 and Year 1. Round to two decimal places. c. What conclusions regarding the risk to the creditors can you draw from (b)? d. Using the balance sheet data for The Home Depot in Exercise 1-26, how does the ratio of liabilities to stockholders’ equity of Lowe’s compare to that of The Home Depot?

BuyFind

Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305088436
BuyFind

Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305088436

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Chapter
Section
Chapter 1, Problem 27E
Textbook Problem

Lowe’s Companies Inc., a major competitor of The Home Depot in the home improvement business, operates over 1,700 stores. Lowe’s recently reported the following balance sheet data (in millions):

Chapter 1, Problem 27E, Lowes Companies Inc., a major competitor of The Home Depot in the home improvement business,

  1. a. Determine the total stockholders’ equity at the end of Years 2 and 1.
  2. b. Determine the ratio of liabilities to stockholders’ equity for Year 2 and Year 1. Round to two decimal places.
  3. c. What conclusions regarding the risk to the creditors can you draw from (b)?
  4. d. Using the balance sheet data for The Home Depot in Exercise 1-26, how does the ratio of liabilities to stockholders’ equity of Lowe’s compare to that of The Home Depot?

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