LOWE'S COMPANIES INC.

Lowe's Companies Inc. as a Multinational Corporation

Abstract

This research paper tends to assess the financial health of Lowe's Companies Inc. in the face of global financial crunch and domestic credit shortages. It aims to study the effects of the turmoil in the home improvement retailer firm and provides for its implications and strategies against facing such a drastic crunch in terms of credit shortages, exchange rate volatilities and other macroeconomic uncertainties. Like any other business Lowe's Companies Inc since is also a U.S. based firm that had been affected by the financial crunch on a grand scale, especially from July 2008 onwards. This attempts to highlight major declines in its financial records and provides for its justifications in a systematic manner.

Table of Contents

Abstractii

Introduction1

Comparing Financial Performance2

Effect of Internal Credit Crisis on the Performance of Lowe's Companies Inc.6

Effects due to Weak Global Conditions7

Effects due to Exchange rates8

Effects Due to Credit Shortages9

Conclusion10

References11

Appendix12

Lowe's Companies Inc. as a Multinational Corporation

Introduction

Lowe's Companies Inc. was founded in 1946 and has grown from a hardware store to the U.S.'s second largest Home improvement retailer store after Sears. The company operates more than 1725 stores in United States, Mexico and Canada. The range of home improving services that Lowe's provides include home decorating, maintenance, repairing, and remodeling of commercial buildings. The firm has reported annual sales of over $47 billion over its recent durations. Their product offerings include: gardening supplies, home decor items, lumber, plumbing supplies and fixtures, electrical supplies and light fixtures, paint, flooring, cabinetry, and appliances for Do-It-Yourself consumers and professionals (Biesada, Hoovers, 2006). Lowe's operates in a highly concentrated competitive environment, sharing close to half of total market share with their #1 competitor, HD. Now is an especially interesting time to assess the health of the company because Lowe's performance is tied closely to the US housing market. We performed a merged company analysis with the goal of understanding how Lowe's is adjusting to the current market and planning for success in the future (Kieso, , Weygandt, Warfield, 2007).

Comparing Financial Performance

Major Components of Financial Performance of Lowe's Companies Inc.

Third Quarter (July 2008)

Second Quarter 2008

First Quarter 2008

Fiscal year 2008

Fiscal Year 2007

Total assets

33,029,000

32,549,000

32,654,000

30,869,000

27,767,000

Total liabilities

15,072,000

15,043,000

16,035,000

14,771,000

12,042,000

Retained earnings (accumulated Deficit)

17,012,000

16,648,000

15,835,000

15,345,000

14,860,000

Total shareholders' equity (Deficiency)

17,957,000

17,506,000

16,619,000

16,098,000

15,725,000

Net earnings

488,000

938,000

607,000

2,809,000

3,105,000

Net earnings per share - basic

0.33

0.64

0.42

1.9

2.02

An analysis for the company's key financial ratios is helpful in comparing its financial performance over a certain period of time. The main aim behind the ratios' analysis is to account for specific heads in the financial records of the company for a particular year (or period) and compare them to similar components of the other years. These analyses give us a clear idea about the deficiencies or additions to the financial health of the company in terms of profits gained and losses suffered. In the face of financial crunch that had taken the corporate world by storm, the significance of ratios analysis has been three-fold due to the increased volatility of businesses and ever-changing financial climates (Financial Times UK, 2006) Ratios' analysis is mainly comprised of the ...