Investment Accounting Policy
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits and short-term investments with original maturities of three months or less when purchased. Cash and cash equivalents are carried at amortized cost on the consolidated balance sheets. The majority of payments due from financial institutions for the settlement of credit card and debit card transactions process within two business days and are, therefore, classified as cash and cash equivalents.
Investments
As of February 3, 2012, investments consisted primarily of money market funds, municipal obligations, municipal floating rate obligations and mutual funds. Lowe's Cos. Inc. classifies as investments restricted balances pledged as collateral for Lowe's Cos. Inc.'s extended protection plan program and for a portion of Lowe's Cos. Inc.'s casualty insurance and Installed Sales program liabilities. Investments, exclusive of cash equivalents, with a stated maturity date of one year or less from the balance sheet date or that are expected to be used in current operations, are classified as short-term investments. Lowe's Cos. Inc.'s trading securities are also classified as short-term investments. All other investments are classified as long-term.
Lowe's Cos. Inc. maintains investment securities that were previously held in conjunction with certain employee benefit plans that are classified as trading securities. These securities are carried at fair value with unrealized gains and losses included in SG&A expense. All other investment securities are classified as available-for-sale and are carried at fair value with unrealized gains and losses included in accumulated other comprehensive income (loss) in shareholders' equity.
Source: Lowe's Cos. Inc., Annual Report
Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
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Lowe's Cos. Inc., adjustment to Net Earnings
Adjusted Ratios: Mark to Market Available-for-sale Securities (Summary)
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Lowe's Cos. Inc., adjusted ratios
| Ratio |
Description |
The company |
| Adjusted net profit margin |
An indicator of profitability, calculated as adjusted net income divided by revenue. |
Lowe's Cos. Inc.'s adjusted net profit margin improved from 2010 to 2011 but then deteriorated significantly from 2011 to 2012.
|
| Adjusted ROE |
A profitability ratio calculated as adjusted net income divided by shareholders' equity. |
Lowe's Cos. Inc.'s adjusted ROE improved from 2010 to 2011 and from 2011 to 2012.
|
| Adjusted ROA |
A profitability ratio calculated as adjusted net income divided by total assets. |
Lowe's Cos. Inc.'s adjusted ROA improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012 not reaching 2010 level.
|
Adjusted Net Profit Margin
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2012 Calculations
| Ratio |
Description |
The company |
| Adjusted net profit margin |
An indicator of profitability, calculated as adjusted net income divided by revenue. |
Lowe's Cos. Inc.'s adjusted net profit margin improved from 2010 to 2011 but then deteriorated significantly from 2011 to 2012.
|
Adjusted Return On Equity (ROE)
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2012 Calculations
| Ratio |
Description |
The company |
| Adjusted ROE |
A profitability ratio calculated as adjusted net income divided by shareholders' equity. |
Lowe's Cos. Inc.'s adjusted ROE improved from 2010 to 2011 and from 2011 to 2012.
|
Adjusted Return On Assets (ROA)
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2012 Calculations
| Ratio |
Description |
The company |
| Adjusted ROA |
A profitability ratio calculated as adjusted net income divided by total assets. |
Lowe's Cos. Inc.'s adjusted ROA improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012 not reaching 2010 level.
|
