Question

Real World Financials The table below contains selected information from recent financial statements of The Home Depot, Inc., and Lowe’s Companies, Inc., two companies in the home improvement retail industry ($ in millions): Home Depot Lowe's 1/31/16 2/1/15 1/29/16 1/30/15 Net sales $ 81,602 $ 77,544 $ 56,207 $ 53,311 Cost of goods sold 54,212 49,542 25,665 33,824 Year-end inventory 13,430 13,050 9,397 8,870 Industry Averages: Gross profit ratio 33 % Inventory turnover ratio 3.9 times Average days in inventory 94 days Required: Calculate the gross profit ratio, the inventory turnover ratio, and the average days in inventory for the two companies for their fiscal years ending in 2016. (Use 365 days a year. Round "Inventory turnover ratio" to 2 decimal places. Enter dollar amounts in millions. Round the dollar answer values to the nearest whole dollars.)

Answer 1

	(All amounts are in millions)
	Home Depot		Lowe
	2016	2015	2016	2015
Net Sales	$       81,602	$         77,544	$         56,207	$              53,311
Cost of goods sold	$       54,212	$         49,542	$         25,665	$              33,824
Inventory	$       13,430	$         13,050	$           9,397	$                8,780
Gross Profit(Net Sales-COGS)	$       27,390	$         28,002	$         30,542	$              19,487
Gross Profit ratio(Gross Profit / Net Sales)	33.57%	36.11%	54.34%	36.55%
Average Inevntory for 2016	$ 13,240.00		$      9,088.50
Inventory Turnover ratio =Cost of goods sold / Average Inventory	4.09		2.82
Average Days of Inventory =365 days / Inventory Turnover ratio	89 days		129 days