Group Activity: Analyzing Lowe’s Companies, Inc. The condensed income statement and balance sheet information provided as follows is for Lowe’s Companies, Inc., a large retail company that sells building materials and supplies. Lowe’s had 1,354,000,000 shares issued and outstanding at January 28, 2011, and the market price per share on that date was $24.83. (Note that Lowe’s 2010 fiscal year ends on January 28, 2011. This is called the 2010 fiscal year because only one month is in 2011, the other 11 months of the fiscal year are in 2010, and the company has chosen to refer to this as the 2010 fiscal year. This same concept applies to fiscal year 2009.)

Form groups of two to four students. Each group is to be assigned one of the following three categories of financial measures:

1. Profitability measures

1. Gross margin ratio

2. Profit margin ratio

3. Return on assets

4. Return on common shareholders’ equity

2. Short-term liquidity measures

1. Current ratio

2. Quick ratio

3. Inventory turnover ratio and average sales period

3. Long-term solvency and market valuation measures

1. Debt to assets

2. Debt to equity

3. Market capitalization Required:

d. Calculate the financial measures assigned to your group. Round all computations to two decimal places, except the market capitalization measure, which can be rounded to the nearest billion dollars .

e. Provide a brief explanation of each measure your group calculated in requirement a.

f. Discuss the results of your group with the class.