Case study: Value line publishing
Zongchao Yang 701821448

According to the case, there are two major companies in the industry which are Home depot and Lowe’s. Home depot have a much larger market share than Lowe’s and the case has already presented the balance sheet and the ratio sheet of Home depot. So based on the Lowe’s balance sheet and the sheets of Home depot which are presented in the case. We can easily get all the ratios of Lowe’s. According to these ratios, we can find out that Lowe’s has done a good job because the sales and the NOPAT is increasing every year. So this tread and ratio may help us to forecast the performance of Lowe’s in the next five years. Ratio analysis for Lowe's | | | 1997 | 1998 | 1999 | 2000 | 2001 | | | | | | | Working capital | 673 | 920 | 1367 | 1288 | 1962 | Fixed assets | 3109 | 3759 | 5319 | 7201 | 8815 | Total capital | 3782 | 4679 | 6686 | 8489 | 10777 | Tax rate | 38.90% | 39.20% | 39% | 38.80% | 38.60% | NOPAT | 381 | 506 | 715 | 858 | 1103 | | | | | | | PROFITABILITY | | | | | | Return on capital | 10.1% | 10.8% | 10.7% | 10.1% | 10.2% | Return on equity | 13.7% | 15.4% | 14.3% | 7.1% | 7.5% | | | | | | | MARGINS | | | | | | Gross margin | 26.5% | 26.9% | 27.5% | 28.2% | 28.8% | cash operating expenses/sales | 18.0% | 17.9% | 18.0% | 18.5% | 18.3% | Depreciation/sales | 2.4% | 2.2% | 2.1% | 2.2% | 2.4% | Depreciation/P&E | 8.0% | 7.5% | 6.5% | 5.8% | 6.2% | Operating margin | 6.2% | 6.8% | 7.4% | 7.5% | 8.1% | NOPAT margin | 3.8% | 4.1% | 4.5% | 4.6% | 5.0% | | | | | | | TURNOVER | | | | | | Total capital turnover | 2.68 | 2.61 | 2.38 | 2.21 | 2.51 | P&E turnover | 3.37 | 3.36 | 3.07 | 2.70 | 2.60 | Working-capital turnover | 15 | 13.3 | 11.6 | 14.5 | 11.3 | Receivable turnover | 86 | 85 | 107 | 116 | 133 | Inventory turnover | 4.3 | 4.2 | 4.1 | 4.1 | 4.3 | Sales per store ($ millions) | 21 | 23.5 | 27.6 | 28.9 | 29.7 | Sales per sq. foot($) | 253 | 255 | 279 | 276 | 273 | Sales per transaction ($) | 43.8 | 45.7 | 53.2 | 55 | 56 | | | | | | | GROWTH | | | | | | Total sales growth | | 20.8% | 29.9% | 18.1% | 17.7% | Sales growth for existing stores | | 11.9% | 17.5% | 4.7% | 2.8% | Growth in new stores | | 9.0% | 10.0% | 12.8% | 14.5% | Growth in sq. footage per store | | 16.0% | 11.6% | 14.4% | 15.5% | | | | | | | LEVERAGE | | | | | | Total capital/equity | 1.45 | 1.49 | 1.42 | 1.54 | 1.61 |