Over the year home Depot Inc, gross profit margin has decreased , however decremental percentage is not very high. It has decreased from 34.19% in Jan 31, 2016 to 34.16% in Jan 28, 2017 to 34.05% in Jan 28, 2018.
Over the year operating expenses have also decreased from 20.89% in Jan 31, 2016 to 19.97% in Jan 28. 2017 to 19.50% in Jan 28, 2018. As a result of which operating income has improved from 13.30% in Jan 31, 2016 to 14.19% in Jan 28, 2017 to 14.55% in Jan 28, 2018. And similarly there has also been improvement in net profit margin from 7.92% in Jan 31, 2016 to 8.41% in Jan 28, 2017 to 8.55% in Jan 28. 2018.
Over the year Lowe's companies Inc gross profit ratio has declined from 34.82% in Jan 29, 2016 to 34.55% in Feb 3, 2017 to 34.11% in Feb 2, 2018. However due to decreasing trend of operating expenses , we can see that operating income has increased year over year from 8.41% in Jan 29, 2016 to 8.99% in Feb 3, 2017 to 9.60% in Feb 2, 2018. Similarly there has also been improvement in net profit ratios of the company year over year. It has improved from 4.31% in Jan 29, 2016 to 4.76% in Feb 3, 2016 to 5.02% in Feb 2, 2018.
Comparing the sales and profit of both the company we can see that sales of home inc is more than Lowe's company by a major amount . There has been increase in sales of both the company year on year. Gross profit margin of both the company is very close which shows that both the company charges almost similar price for their product and product of the company is priced by the market and not by the company which shows perfect competition in the market. Also gross profit margin of the company is on the declining trend. When we talk about about operating income Margin of both the company we can see that operating profit margin home Depot Inc is far better than Lowe's company . The reason may be high volume of fixed expense of Lowe's company.
Finally when it comes to Net profit margin again the performance of home Depot company is better than Lowe's company.
So overall we can conclude that home Depot inc is more profitable than Lowe's companies Inc the foremost reason being higher sales amount of home Depot Inc and comparitively lesser administrative expense. For analyzing the profit of the both the company common size statement of earning of both the companies will be used.
2. No profit margin of both the company is quote quite different . However the rate of increase is quite similar in both the companies.
Following is the comparative view of profitability margin of both the company :-
Year | Home Depot Inc | Lowe's companies Inc |
2017 (Jan &Feb 2018) | 8.55% |
5.02 |
2016 (Jan & Feb 2017 | 8.41% |
4.76% |
Clearly we can see that home Depot Inc have better profit margin as compared to lose's companies Inc mainly due to higher sales and comparetively lower administrative expenses .
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