Lowe’s Companies, Inc.| NYSE |LOW
o Lowe’s SEC 10-K report
Key Sections Analysis:
o Identify and describe the main sections of the Statement of Shareholders’ Equity for your selected company. Discuss why each section is important for stakeholders.
o How does the Statement of Shareholders’ Equity interact with other financial statements (Income Statement, Balance Sheet, Cash Flow Statement)?
Retained Earnings:
o Explain the significance of Retained Earnings or Accumulated Deficit. How do changes in this account reflect a company’s financial health?
o Provide an example from your selected company of how dividends paid and stock repurchased affect Retained Earnings.
Comprehensive Income:
o Define Accumulated Other Comprehensive Income (OCI). What types of transactions typically affect OCI?
o Discuss the impact of OCI on a company’s overall financial picture.
Revenue and Net Income Analysis
o Explain the relationship between net sales, cost of goods sold (COGS), and gross profit. Why is this relationship important for assessing a company’s financial health?
o Discuss how variations in the corporate tax rate can impact a company’s net income. Why is it important for companies to disclose their effective tax rate?
Comprehensive Income
o Explain the concept of comprehensive income. How does it differ from net income?
o Identify common items under Other Comprehensive Income (OCI) for your selected company. Why are these items reported separately from net income?
Income Statement Insights
o Consider the format and presentation of the income statement for your selected company. How do different formats (single-step vs. multi-step) impact the interpretation of a company’s financial performance?
o Discuss the significance of the bottom line of the Statement of Comprehensive Income. What does this number tell us about your selected company’s overall financial performance?
Current Assets and Liabilities
o Define current assets and current liabilities. Why is it important to differentiate between current and non-current items on the balance sheet?
o Discuss the significance of the ratio of current assets to current liabilities (current ratio) in evaluating your selected company’s short-term financial health.
Working Capital Analysis
o Explain the concept of working capital. Calculate the working capital using the formula (current assets – current liabilities) for your selected company. Why is working capital a crucial measure for a company’s operational efficiency?
o Analyze how changes in working capital can affect your selected company’s liquidity and overall financial stability. Provide examples from the 10-K to illustrate your points.
Stockholders’ Equity and Treasury Stock
o Discuss the components of stockholders’ equity and what they represent. How do total assets and total stockholders’ equity reflect your selected company’s financial position?
o Explain the concept of treasury stock and its normal balance. Why might a company increase or decrease its treasury stock, and how does this impact the equity section of the balance sheet?
Comprehensive Income and Retained Earnings
o Define other comprehensive income and accumulated deficit from the 10-K. How do these figures differ from retained earnings, and why are they important for stakeholders to understand?
o Discuss the trends and changes in other comprehensive income, accumulated deficit, and retained earnings over time. What might these changes indicate about your selected company’s financial health and strategic decisions?
o Operating Activities Analysis:
Net Income vs. Operating Cash Flow
o Compare your selected company’s net income and total cash provided by (or used by) operating activities. What differences do you observe between these two values, and why might they differ?
o Identify and discuss any significant non-cash items that impact operating cash flow. How do these items affect the company’s ability to generate cash from its core operations?
Cash Flow from Operations
o Assess whether the company is generating positive cash flow from its operations. What implications does this have for the company’s ability to sustain its business operations and invest in growth opportunities?
o Investing and Financing Activities Analysis:
o Investing Activities
o Describe any significant long-term assets your selected company purchased, sold, or retired during the current period and compare them to the previous year. How do these activities contribute to the company’s strategic objectives?
o Analyze the impact of these investing activities on the company’s liquidity and future growth prospects.
Financing Activities
Financing activities related to long-term liabilities and stockholders’ equity.
• How does the company utilize financing to support its operations and strategic initiatives?
o Evaluate the impact of these financing activities on the company’s capital structure and financial flexibility.
Cash Flow Analysis:
Overall Cash Flow Trends
o Examine the total cash flow for the past three years presented in the statement of cash flows. How has the company’s overall cash flow changed over this period, and what factors might have contributed to these changes?
o Discuss the implications of these cash flow trends for the company’s financial health and prospects.
o How does accounting information influence business decisions?
o What contributions do managerial accountants make to organizational decision-making?
Incremental Analysis
o Explore the concept of incremental analysis:
o What is incremental analysis, and how does it differ from other decision-making techniques?
o How can incremental analysis aid businesses in both short-term and long-term decision-making?
