Two leading home improvement chains in the United States are Home Depot and Lowes. Selected financial data for these two close competitors are as follows: $$\begin{array} { l r r }
\text { (\$ in millions) } & \text { Home Depot } & \text { Lowes } \
& & \
\text { Total assets } & \$ 40,877 & \$ 33,005 \
\text { Total liabilities } & 21,484 & 13,936 \
\text { Total stockholders' equity } & 19,393 & 19,069 \
& & \
\text { Sales } & \$ 66,176 & \$ 47,220 \
\text { Interest expense } & 676 & 287 \
\text { Tax expense } & 1,362 & 1,042 \
\text { Net income } & 2,620 & 1,783
\end{array}$$ 1. Calculate the debt to equity ratio for Home Depot and Lowes. Which company has the higher ratio?
2. Calculate the times interest earned ratio for Home Depot and Lowes. Which company is better able to meet interest payments as they become due?

Question

Two leading home improvement chains in the United States are Home Depot and Lowes. Selected financial data for these two close competitors are as follows: $$\begin{array} { l r r } 
\text { (\$ in millions) } & \text { Home Depot } & \text { Lowes } \
& & \
\text { Total assets } & \$ 40,877 & \$ 33,005 \
\text { Total liabilities } & 21,484 & 13,936 \
\text { Total stockholders' equity } & 19,393 & 19,069 \
& & \
\text { Sales } & \$ 66,176 & \$ 47,220 \
\text { Interest expense } & 676 & 287 \
\text { Tax expense } & 1,362 & 1,042 \
\text { Net income } & 2,620 & 1,783
\end{array}$$ 1. Calculate the debt to equity ratio for Home Depot and Lowes. Which company has the higher ratio?
2. Calculate the times interest earned ratio for Home Depot and Lowes. Which company is better able to meet interest payments as they become due?

Quizplus · Accepted Answer

The Answer of Two leading home improvement chains in the United States are Home Depot and Lowes. Selected financial data for these two close competitors are as follows: $$\begin{array} { l r r } 
\text { (\$ in millions) } & \text { Home Depot } & \text { Lowes } \
& & \
\text { Total assets } & \$ 40,877 & \$ 33,005 \
\text { Total liabilities } & 21,484 & 13,936 \
\text { Total stockholders' equity } & 19,393 & 19,069 \
& & \
\text { Sales } & \$ 66,176 & \$ 47,220 \
\text { Interest expense } & 676 & 287 \
\text { Tax expense } & 1,362 & 1,042 \
\text { Net income } & 2,620 & 1,783
\end{array}$$ 1. Calculate the debt to equity ratio for Home Depot and Lowes. Which company has the higher ratio?
2. Calculate the times interest earned ratio for Home Depot and Lowes. Which company is better able to meet interest payments as they become due?

Two Leading Home Improvement Chains in the United States Are