determine the ratio of liabilities to stockholders rsquo equity for 2009 and 2008 ro 551147

EX 1-27 Ratio of liabilities to stockholders’ equity

Lowe’s, a major competitor of The Home Depot in the home improvement business, operates over 1,600 stores. For the years ending January 30, 2009, and February 1, 2008, Lowe’s reported the following balance sheet data (in millions):

a. Determine the total stockholders’ equity as of January 30, 2009, and February 1, 2008.

b. Determine the ratio of liabilities to stockholders’ equity for 2009 and 2008. Round to two decimal places.

c. What conclusions regarding the margin of protection to the creditors can you draw from (b)?

d. Using the balance sheet data for The Home Depot in Exercise 1-26, how does the ratio of liabilities to stockholders’ equity of Lowe’s compare to that of The Home Depot?