1. Explain how Lowe’s could have a higher gross profit percentage


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Apr 30, 2015. 1. Explain how Lowe’s could have a higher gross profit percentage than Lumber Liquidators but a nearly identical net profit margin. What does this suggest about the relative ability of the two companies to control operating expenses? 2. Explain how Lumber Liquidators could have a higher return on equity but lower earnings per share. What does this suggest about the companies’ relative number of outstanding shares? What other explanations could account for this seemingly contradictory pattern? Attached are the annual reports. ATTACHMENT PREVIEW Download attachment ACT 2300 CASE STUDY 2014.doc ACT 2300 CASE STUDY: EVALUATING FINANCIAL INFORMATION: Complete the following “Skills Development Cases” given below: SKILLS DEVELOPMENT CASE S13-1Evaluating Financial Information comp:marginal text LO 13-5 Lumber Liquidators, Inc., competes with Lowe’s in product lines such as hardwood flooring, moldings, and noisereducing underlay. The two companies reported the following financial results in fiscal 2010: Lumber LiquidatorsLowe’s Gross profit percentage 34.8% 35.1% Net profit margin 4.2% 4.1% Return on equity 14.6% 11.1% Earnings per share $ 0.96 $ 1.42 1. Explain how Lowe’s could have a higher gross profit percentage than Lumber Liquidators but a nearly identical net profit margin. What does this suggest about the relative ability of the two companies to control operating expenses? 2. Explain how Lumber Liquidators could have a higher return on equity but lower earnings per share. What does this suggest about the companies’ relative number of outstanding shares? What other explanations could account for this seemingly contradictory pattern? You can refer to the annual reports of Lowe’s Inc. in Exhibit 13.1 and 13.2. The annual report of Lumber Liquidators is provided as a separate file attachment to this assignment. Page 24 (Selected financial data of the annual report (10K) will give you the Income statement and Balance sheet data for Lumber Liquidators). Please use this financial information for Lowe’s and Lumber Liquidators to support your analysis. Read more JO1222
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