Lopez 1
Name Camila Lopez
Professor George Bernard
Course Principles of Managerial Accounting
Date November 8, 2015
Home Depot/Lowes Ratio Analysis Assignment
a) Liquidity ratios
As per the ratios shown below, Home Depot is more liquid than Lowe’s. Therefore, Home Depot
is more capable of meeting its short-term obligations than Lowe’s. However, Lowe’s is more
efficient than Home Depot in converting inventory into sales over time (“Ready Ratios: Liquidity
ratios” 1).
1. Current ratio
The current ratio = Current Assets / Current Liabilities
Home Depot Year
2015
($m)
2014
($m)
2013
($m)
Current assets 15302 15279 15372
Current liabilities 11269 10749 11462
Current rao 1.4 1.4 1.3
Lowe’s Year
2015
($m)
2014
($m)
2013
($m)
Current assets 10080 10296 9784
Current liabilities 9348 8876 7708
Current rao 1.1 1.2 1.3
2. Acid-test (quick) ratio
Lopez 2
Acid-test (quick) ratio = (Current Assets – Inventory)/ Current liabilities (“Ready Ratios” 1)
Home Depot Year
2015
($m)
2014
($m)
2013
($m)
Current assets 15302 15279 15372
Inventory 11079 11057 10710
Current liabilities 11269 10749 11462
Acid-test (quick)
ratio 0.37 0.39 0.41
Lowe’s Year
2015
($m)
2014
($m)
2013
($m)
Current assets 10080 10296 9784
Inventory 8911 9127 8600
Current liabilities 9348 8876 7708
Acid-test (quick)
