Home Depot -Vs- LowesEssay title: Home Depot -Vs- LowesHome Depot / Lowe’s Financial Analysis 1Running head: THE HOME LEADER -VS- IMPROVING HOME IMPROVEMENTSThe Home Leader -vs- Improving Home ImprovementsJames J. ElliottCapella UniversityDouglas Smith, PhDAccounting and Finance in OrganizationsHome Depot / Lowe’s Financial Analysis 2AbstractAn industry of competition, and tight margins The Home Depot, and Lowe’s Company are still at it. Both of these companies stand now as the industry standard for the home improvement sector. The numbers that will be presented in this study show proof that both companies have extremely strong financial positions, and a long future in the home improvement industry. Competition is good for the retailer, but even better for the customer. Each company has its strengths and limitations. The decision on which retailer is the better one must be decided by the individual analyzing of each company. The Home Leader -vs- Improving Home Improvements.
2. The Comparison of the Companies and the Consumer: The National Competition Center on Home Affordable Markets and Markets on Consumers of Home Electronics, http://www.ncc.gov/competition/ncc_national/2index.htm The home improvement industry has been subject to a number of governmental activities. While the United States has a strong consumer and business relationship with the home improvement industry, there is also substantial governmental responsibility for consumers. The National Competition Center on Home Affordable Markets and Markets on Consumers of Home Electronics, http://www.ncc.gov/competition/ncc_national/2index.htm and the American Home Builders Association have both set national standards on consumer spending and home spending. Although they did not specify what policies are to be followed, each of these organizations set the standards on how the industry can comply with specific consumer and commercial laws. A similar level of governmental responsibility is required between the major manufacturers of new, new, and second generation Home Appliance components. While one of the manufacturers does a good job of enforcing regulations, more consumer-friendly and cost-effective regulations are required for products sold in the third generation of the consumer electronics market. The cost-benefit analysis of this study is based on the consumer purchasing power and the cost-benefit ratios shown for other industries. The consumer is charged a reasonable estimate of product quality and it is very likely that consumers will be able to benefit from a better quality product after the product is sold. As a result consumers will be able choose their manufacturer. The number and types of products that consumers choose is determined by the number of factors that a manufacturer and the consumer can agree on to a number of that will increase the likelihood of success at various quality and cost-cutting steps. The results presented here show that when consumers were asked to estimate the cost and benefit of every new product, they were able to estimate that there would be 4 to 7 “efficiencies” in every category that was “in the ballpark.” This is because even if consumers were able to make a “price per unit improvement” estimate and the consumer could use this number to calculate a lower price for each unit improvement their purchase made within the four year period, there would be 4 to 7 “efficiencies” in every category. If a typical consumer is willing to pay more the higher price, and the consumer was willing to make his or her financial investment in the cheapest new product after three years, he or she would be able to save a few dollars per unit by not spending a fair amount of time buying and selling new home improvement product at cost to the average consumer. The Home Leader -vs- Improving Home Improvements. Because the Consumer’s price should be consistent from year to year, and consumer spending should be consistent from year to year, as opposed to the price inflation that was found during the recession, consumer spending can sometimes become very low. In that case, consumer spending is likely to increase slightly over the average year to year. Thus, when the Home Leader is asked to estimate the cost and benefit of every new product, they must estimate that there would be 3 to 7 “efficiencies” on each category. The costs are calculated with the Consumer Expenditures for each of the four years. In the first two years, the cost of each component of the consumer’s bill should be more or less equal to the consumer’s purchasing power or for a lesser amount by the Consumer Expenditures for Each of the four years. In the last two years, for each year that is in the last four years (as it is being determined by the Consumer Expenditures for each of the four years), and in the last two years for each category, that cost should be less than or equal to the Consumer Expenditures per dollar spent. As the cost to each consumer has increased since 1994, the Consumer Expenditures per dollar spent is going
2. The Comparison of the Companies and the Consumer: The National Competition Center on Home Affordable Markets and Markets on Consumers of Home Electronics, http://www.ncc.gov/competition/ncc_national/2index.htm The home improvement industry has been subject to a number of governmental activities. While the United States has a strong consumer and business relationship with the home improvement industry, there is also substantial governmental responsibility for consumers. The National Competition Center on Home Affordable Markets and Markets on Consumers of Home Electronics, http://www.ncc.gov/competition/ncc_national/2index.htm and the American Home Builders Association have both set national standards on consumer spending and home spending. Although they did not specify what policies are to be followed, each of these organizations set the standards on how the industry can comply with specific consumer and commercial laws. A similar level of governmental responsibility is required between the major manufacturers of new, new, and second generation Home Appliance components. While one of the manufacturers does a good job of enforcing regulations, more consumer-friendly and cost-effective regulations are required for products sold in the third generation of the consumer electronics market. The cost-benefit analysis of this study is based on the consumer purchasing power and the cost-benefit ratios shown for other industries. The consumer is charged a reasonable estimate of product quality and it is very likely that consumers will be able to benefit from a better quality product after the product is sold. As a result consumers will be able choose their manufacturer. The number and types of products that consumers choose is determined by the number of factors that a manufacturer and the consumer can agree on to a number of that will increase the likelihood of success at various quality and cost-cutting steps. The results presented here show that when consumers were asked to estimate the cost and benefit of every new product, they were able to estimate that there would be 4 to 7 “efficiencies” in every category that was “in the ballpark.” This is because even if consumers were able to make a “price per unit improvement” estimate and the consumer could use this number to calculate a lower price for each unit improvement their purchase made within the four year period, there would be 4 to 7 “efficiencies” in every category. If a typical consumer is willing to pay more the higher price, and the consumer was willing to make his or her financial investment in the cheapest new product after three years, he or she would be able to save a few dollars per unit by not spending a fair amount of time buying and selling new home improvement product at cost to the average consumer. The Home Leader -vs- Improving Home Improvements. Because the Consumer’s price should be consistent from year to year, and consumer spending should be consistent from year to year, as opposed to the price inflation that was found during the recession, consumer spending can sometimes become very low. In that case, consumer spending is likely to increase slightly over the average year to year. Thus, when the Home Leader is asked to estimate the cost and benefit of every new product, they must estimate that there would be 3 to 7 “efficiencies” on each category. The costs are calculated with the Consumer Expenditures for each of the four years. In the first two years, the cost of each component of the consumer’s bill should be more or less equal to the consumer’s purchasing power or for a lesser amount by the Consumer Expenditures for Each of the four years. In the last two years, for each year that is in the last four years (as it is being determined by the Consumer Expenditures for each of the four years), and in the last two years for each category, that cost should be less than or equal to the Consumer Expenditures per dollar spent. As the cost to each consumer has increased since 1994, the Consumer Expenditures per dollar spent is going
2. The Comparison of the Companies and the Consumer: The National Competition Center on Home Affordable Markets and Markets on Consumers of Home Electronics, http://www.ncc.gov/competition/ncc_national/2index.htm The home improvement industry has been subject to a number of governmental activities. While the United States has a strong consumer and business relationship with the home improvement industry, there is also substantial governmental responsibility for consumers. The National Competition Center on Home Affordable Markets and Markets on Consumers of Home Electronics, http://www.ncc.gov/competition/ncc_national/2index.htm and the American Home Builders Association have both set national standards on consumer spending and home spending. Although they did not specify what policies are to be followed, each of these organizations set the standards on how the industry can comply with specific consumer and commercial laws. A similar level of governmental responsibility is required between the major manufacturers of new, new, and second generation Home Appliance components. While one of the manufacturers does a good job of enforcing regulations, more consumer-friendly and cost-effective regulations are required for products sold in the third generation of the consumer electronics market. The cost-benefit analysis of this study is based on the consumer purchasing power and the cost-benefit ratios shown for other industries. The consumer is charged a reasonable estimate of product quality and it is very likely that consumers will be able to benefit from a better quality product after the product is sold. As a result consumers will be able choose their manufacturer. The number and types of products that consumers choose is determined by the number of factors that a manufacturer and the consumer can agree on to a number of that will increase the likelihood of success at various quality and cost-cutting steps. The results presented here show that when consumers were asked to estimate the cost and benefit of every new product, they were able to estimate that there would be 4 to 7 “efficiencies” in every category that was “in the ballpark.” This is because even if consumers were able to make a “price per unit improvement” estimate and the consumer could use this number to calculate a lower price for each unit improvement their purchase made within the four year period, there would be 4 to 7 “efficiencies” in every category. If a typical consumer is willing to pay more the higher price, and the consumer was willing to make his or her financial investment in the cheapest new product after three years, he or she would be able to save a few dollars per unit by not spending a fair amount of time buying and selling new home improvement product at cost to the average consumer. The Home Leader -vs- Improving Home Improvements. Because the Consumer’s price should be consistent from year to year, and consumer spending should be consistent from year to year, as opposed to the price inflation that was found during the recession, consumer spending can sometimes become very low. In that case, consumer spending is likely to increase slightly over the average year to year. Thus, when the Home Leader is asked to estimate the cost and benefit of every new product, they must estimate that there would be 3 to 7 “efficiencies” on each category. The costs are calculated with the Consumer Expenditures for each of the four years. In the first two years, the cost of each component of the consumer’s bill should be more or less equal to the consumer’s purchasing power or for a lesser amount by the Consumer Expenditures for Each of the four years. In the last two years, for each year that is in the last four years (as it is being determined by the Consumer Expenditures for each of the four years), and in the last two years for each category, that cost should be less than or equal to the Consumer Expenditures per dollar spent. As the cost to each consumer has increased since 1994, the Consumer Expenditures per dollar spent is going
Home Depot / Lowe’s Financial Analysis 3Table of Contents