Selected income statement information for 2018 is presented below for Home Depot Inc.
and Lowe's Companies Inc. Assume the statutory tax rate is 22%.
Company ($ millions)
Sales NOPBT Pretax net non-operating expense Tax expense Average net operating assets
Home Depot (HD) 108,203 15,530 974 3,435 25,217
Lowe's (LOW) 71,309 4,018 624 1,080 20,326
Required:
a. Compute the following measures for both companies.
Tax on operating profit
NOPAT
RNOA
NOPM
NOAT
b. Indicate which of these two companies:
Is more profitable (in $s)
Produces the higher profit margin (in %)
Uses its NOA more efficiently
Produces the higher return on NOA
HD LOW
HD LOW