Lowe's emy

Executive Summary
Lowe’s has had a great 2005 year. They have had a 19 percent sales growth and a 27 percent net earnings growth. As one
of the top home improvement chains Lowe’s continues to be prosperous in the industry due to their constant attention to the
needs of their customers and their investments into their expansion. Due to Lowe’s strong drive and performance, in
2005, Lowe's earned several notable industry distinctions, including:
• Ranked 42 on the FORTUNE® 500
• Named 2003, 2004 and 2005 ENERGY STAR® Retail Partner of the Year
• Operates more than 1,234 stores in 49 states
http://www.shareholder.com/lowes/annual.cfm

Introduction
• Robert A. Niblock, Chief Executive Officer
• Lowe’s home office is located at 1000 Lowe’s Boulevard, Mooresville, NC 28117
• Lowe’s ending date of the latest fiscal year is February 03, 2006
• Lowe’s carries a variety of products to assist in the home improvement process such as
lumber, flooring, paint, plumbing, tools, lighting, landscaping products, cabinets,
electrical and much more.

Independent
Auditors
Deloitte & Touche LLP
1100 Carillon Building
227 West Trade Street
Charlotte, NC 28202-1675
Lowe’s was audited in accordance to
the standards of the Public Company
Accounting Oversight Board and
found that Lowe’s records were
accurately and fairly translated. The
auditors conclude that Lowe’s has
maintained effective internal control
over financial reporting as of
February 3, 2006.

• Lowe’s stock price listed in the
NYSE is $28.37 per share
• Twelve month trading range of the
company’s stock
• Dividend per share, annually $0.22
• This information was found on
September 27, 2006
• In my opinion Lowe’s is a good
investment. The company continues
to grow and improve and is a stable
investment.
Stock Market
Information
High 34.85
Low 26.15
1 day-September 27, 2006
1 year-2006
QuickTime™ and a
TIFF (LZW) decompressor
are needed to see this picture.

Industry Situation and Company Plans
The U.S. has hit a record high of homeownership, all who would like to personalize their
homes. Lowe’s is here to help. Lowe's, who has been a leader in the home improvement
industry for the past 60 years and has recently implemented a new program, for those who
need help or do not have the time for “do-it-yourself” projects, the program is called “do-it-
for-me”. By offering this new program Lowe’s has estimated the program to draw a $150
billion dollar revenue. Not only is Lowe's growing internally but continues to grow externally
as well by opening 150 new stores this year with a continued expansion plan of 155 stores
opening in 2006.
QuickTime™ and a

Lowe’s has continued to have significant increases in income over the past three years.
Due to these consistent increases one can only believe that the future of this company will
be very promising.
(In millions)
Years ended on
February 3, 2006 January 28, 2005 January 30, 2004
Net Sales $43,243 $36,464 $30,838
Gross Margin 14,800 12,256 9,569
Total Expenses 10,294 8,720 6,625
Earnings from
Continuing Operations
2,771 2,176 1,829
Net Earnings $2,771 $2,176 $1,844
Lowe’s gross profit, income from operations, and net income for the last three years.
Multi-Step Income Statement
QuickTime™ and a

Lowe’s Assets, Liabilities and Stockholders’ Equity for the past two years.
The biggest change on the balance sheet is the increase in stockholders’ equity from the fiscal
2005 to 2006 year. Stockholders’ equity represents the capital received from investors in
exchange for stock and also includes retained earnings. Therefore the change in stockholder’s
equity is a result of the stockholders’ investments.
Balance Sheet
QuickTime™ and a
(in millions) February 3, 2006 January 30, 2005
Total Assets
(=)
$24,682 $21,138
Total Liabilities
(+)
10,343 9,603
Total Stockholders Equity 14,339 11,535

•Cash flow refers to the amount of cash being
received and spent by a business during a
defined period of time. Lowe’s cash flow from
operations is significantly larger than the net
income for the past two years.
•Lowe’s has a deficit in investing activities
because of the “fixed assets acquired” account
which is an asset which possesses a physical
form and is intended to be used in the business
on a long term basis in order to earn income or
to produce outputs growing through investing
activities. So the deficit from 2004 to 2005
shows that Lowe's is investing money to make
money.
•Lowe’s primary source of financing is through
long-term loans.
•Overall cash has decreased over the past three
years.
(In millions) 2005 2004 2003
Net cash
provided by
operating
activities
$3,842 $3,073 $3,034
Net cash used
in investing
activities
(3,674) (2,362) (2,487)
Net cash used
in financing
activities
(275) (1,047) (17)
Net (decrease)
increase in
cash and cash
equivalents
(107) (336) 530
Cash and cash
equivalents,
beginning of
the year
530 866 336
Cash and cash
equivalents end
of the year
$423 $530 $866
Statement of Cash Flow
QuickTime™ and a

Significant Accounting Policies
Revenue Recognition
The company recognized revenues, net of sales tax when sales transactions
occur and customers take possession of the merchandise. A provision for
anticipated merchandise returns is provided through a reduction of sales and
cost of sales in the period that the related sales are recorded.
Cash
Cash and cash equivalents include cash on hand, demand deposits and short-
term investments with original maturities of 3 month or less when purchased.
Short-Term Investments
Investments, exclusive of cash equivalents, with a stated maturity date of one
year or less from the balance sheet date or that are expected to be used in
current operations, are classified as short-term investments.
Inventories
Management does not believe the Company’s merchandise inventories are
subject to significant risk in the near term but does have the ability to adjust
based on anticipated sales trends.
Property and Equipment
Property is recorded at cost. Costs associated with major additions are
capitalized and depreciated.
QuickTime™ and a
Accounting Policies
QuickTime™ and a

Notes To Consolidated Financial Statements
Note 1 Summary of Significant Accounting Policies
Note 2 Discontinued Operation
Note 3 Investments
Note 4 Accumulated Depreciation
Note 5 Impairment and Store Closing Costs
Note 6 Short-Term Borrowings and Lines of Credit
Note 7 Long Term Debt
Note 8 Financial Instruments
Note 9 Earnings Per Share
Note 10 Shareholder’s Equity
Note 11 Leases
Note 12 Employee Retirement Plan
Note 13 Income Taxes
Note 14 Commitments and Contingencies
Note 15 Other Information
Accounting Policies
QuickTime™ and a
QuickTime™ and a
TIFF(LZW) decompressor

Working Capital:
Current Assets (-) $7,831 $6,903
Current Liabilities
(=)
$5,832 $5,648
Total $1,999 $1,255
Current Assets (/) $7,831 $6,903
Current Liabilities
(=)
$5,832 $5,648
Total 1.34 1.22
Financial Analysis Liquidity Ratio
QuickTime™ and a
Average Days’ Sales Uncollected:
Current Ratio:
Receivable Turnover:
Inventory Turnover:
Average Days’ Inventory on Hand:
Net Sales (/) $43,243 $36, 464
Average Accounts
Receivable (=)
(18+9)/2 9
Total 3203.2 times 4051.6 times
Days in a Year (/) 360 360
Receivable Turnover
(=)
3203.2 4051.6
Total 0.112 days 0.089 days
Cost of Goods Sold
(/)
$28,443 $24,208
Average Inventory
(=)
($6,706+$5,911)/2 $5,911
Total 4.51 times 4.1 times
Days in Year (/) 360 360
Inventory Turnover
(=)
4.51 4.1
Total 79.8 days 87.8 days

Profit Margin:
Profit margin measures how much out of every dollar of
sales a company actually keeps in earnings. Lowe’s
has increased their earnings over the past two years
showing that their income and sales are growing at a
consistent rate..
Asset Turnover:
Asset turnover measures how well assets are being used
to produce revenue. Lowe’s asset turnover increases
progressively with their sales, which means they use
their assets productively.
Return on Assets:
Return on Assets shows how many dollars of profits the
company can achieve for each dollar of assets they
control. It seems that Lowe’s is excelling in converting
their investments into profit.
Return on Equity:
Return on equity measures how much profit a company
generates with the money shareholders’ have invested.
Lowe’s return on equity shows that the investor are
able to generate a good amount of money internally.
Financial Analysis Profitability Ratio
(in millions) 2006 2005
Net Income (/) 2,771 2,176
Net Sales (=) 43,243 36,464
Total 6.4% 5.97%
Net Sales (/) 43,243 36,464
Average Total
Assets (=)
(24,602+21,138)/
2
21,138
Total 1.89 1.73
Net Income (/) 2,771 2,176
Average Total
Assets (=)
(24,603+21,138)/
2
21,138
Total 12.1% 10.3%
Net Income (/) 2,771 2,176
Average
Stockholders
Equity (=)
(14,339+11,535)/
2
11,535
Total 21.4% 18.9%

Debt to Equity:
Debt to equity measures the company’s reliance
on creditor financing as well as the business’s
indebtedness compared to the amount invested
by it’s owners. Lowe's debt to equity ratio
shows that Lowe’s received less than half of its
financing from its investors and more than half
from its creditors.
Financial Analysis Solvency Ratio
2006 2005
Total
Liabilities (/)
10,343 9,603
Stockholder’s
Equity (=)
14,339 11,535
Total 72.13% 83.6%
QuickTime™ and a
QuickTime™ and a

Price/Earning per Share:
Price/ Earning per share is used to measure
how cheap or expensive share prices are.
Lowe’s investors in 2006 paid $7.96 for every
one dollar of earnings and in 2005 paid $11.50
for every one dollar of earnings.
Dividend Yield:
Dividend yield shows the investor the yield they
can expect by purchasing a stock. Lowe's
investors received 0.78% in 2006 and 0.46% in
2005.
Financial Analysis Market Strength
Ratio
2006 2005
Market Price
per Share (/)
28.35 32.20
Earnings per
Share (=)
3.56 2.80
Total 7.96 11.5
2006 2005
Dividends per
Share (/)
.22 .15
Market Price
per Share (=)
28.35 32.20
Total .78% .46%
QuickTime™ and a

Lowe's emy

More Related Content

What's hot

Viewers also liked

Similar to Lowe's emy

Recently uploaded

Lowe's emy