Lowe's Cos. Inc. (LOW) | Short-term (Operating) Activity

Ratios (Summary)

Lowe's Cos. Inc., short-term (operating) activity ratios

	Feb 1, 2013	Feb 3, 2012	Jan 28, 2011	Jan 29, 2010	Jan 30, 2009	Feb 1, 2008
Turnover Ratios
Inventory turnover	5.87	6.01	5.87	5.72	5.88	6.34
Receivables turnover	–	–	–	–	–	–
Payables turnover	10.85	11.54	11.22	11.01	11.74	13.00
Working capital turnover	24.34	23.02	17.14	19.87	39.24	51.64
Average No. of Days
Average inventory processing period	62	61	62	64	62	58
Add: Average receivable collection period	–	–	–	–	–	–
Operating cycle	–	–	–	–	–	–
Less: Average payables payment period	34	32	33	33	31	28
Cash conversion cycle	–	–	–	–	–	–

Source: Based on data from Lowe's Cos. Inc. Annual Reports

Ratio	Description	The company
Inventory turnover	An activity ratio calculated as revenue divided by inventory.	Lowe's Cos. Inc.'s inventory turnover improved from 2011 to 2012 but then slightly deteriorated from 2012 to 2013 not reaching 2011 level.
Receivables turnover	An activity ratio equal to revenue divided by receivables.
Payables turnover	An activity ratio calculated as revenue divided by payables.	Lowe's Cos. Inc.'s payables turnover increased from 2011 to 2012 but then declined significantly from 2012 to 2013.
Working capital turnover	An activity ratio calculated as revenue divided by working capital.	Lowe's Cos. Inc.'s working capital turnover improved from 2011 to 2012 and from 2012 to 2013.
Average inventory processing period	An activity ratio equal to the number of days in the period divided by inventory turnover over the period.	Lowe's Cos. Inc.'s average inventory processing period improved from 2011 to 2012 but then slightly deteriorated from 2012 to 2013 not reaching 2011 level.
Average receivable collection period	An activity ratio equal to the number of days in the period divided by receivables turnoverd.
Operating cycle	Equal to average inventory processing period plus average receivables collection period.
Average payables payment period	An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period.	Lowe's Cos. Inc.'s average payables payment period declined from 2011 to 2012 but then increased from 2012 to 2013 exceeding 2011 level.
Cash conversion cycle	A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period.

Inventory Turnover

	Feb 1, 2013	Feb 3, 2012	Jan 28, 2011	Jan 29, 2010	Jan 30, 2009	Feb 1, 2008
Selected Financial Data (USD $ in millions)
Net sales	50,521	50,208	48,815	47,220	48,230	48,283
Merchandise inventory, net	8,600	8,355	8,321	8,249	8,209	7,611
Inventory Turnover, Comparison to Industry
Lowe's Cos. Inc.¹	5.87	6.01	5.87	5.72	5.88	6.34
Industry, Consumer Services	–	10.54	10.50	10.51	10.45	10.21

Source: Based on data from Lowe's Cos. Inc. Annual Reports

2013 Calculations

¹ Inventory turnover = Net sales ÷ Merchandise inventory, net
= 50,521 ÷ 8,600 = 5.87

Ratio	Description	The company
Inventory turnover	An activity ratio calculated as revenue divided by inventory.	Lowe's Cos. Inc.'s inventory turnover improved from 2011 to 2012 but then slightly deteriorated from 2012 to 2013 not reaching 2011 level.

Receivables Turnover

	Feb 1, 2013	Feb 3, 2012	Jan 28, 2011	Jan 29, 2010	Jan 30, 2009	Feb 1, 2008
Selected Financial Data (USD $ in millions)
Net sales	50,521	50,208	48,815	47,220	48,230	48,283
Accounts receivable	–	–	–	–	–	–
Receivables Turnover, Comparison to Industry
Lowe's Cos. Inc.¹	–	–	–	–	–	–
Industry, Consumer Services	–	29.36	29.72	31.92	34.58	32.09

Source: Based on data from Lowe's Cos. Inc. Annual Reports

2013 Calculations

¹ Receivables turnover = Net sales ÷ Accounts receivable
= 50,521 ÷ – = –

Ratio	Description	The company
Receivables turnover	An activity ratio equal to revenue divided by receivables.

Payables Turnover

	Feb 1, 2013	Feb 3, 2012	Jan 28, 2011	Jan 29, 2010	Jan 30, 2009	Feb 1, 2008
Selected Financial Data (USD $ in millions)
Net sales	50,521	50,208	48,815	47,220	48,230	48,283
Accounts payable	4,657	4,352	4,351	4,287	4,109	3,713
Payables Turnover, Comparison to Industry
Lowe's Cos. Inc.¹	10.85	11.54	11.22	11.01	11.74	13.00
Industry, Consumer Services	–	13.55	13.57	13.77	14.55	13.47

Source: Based on data from Lowe's Cos. Inc. Annual Reports

2013 Calculations

¹ Payables turnover = Net sales ÷ Accounts payable
= 50,521 ÷ 4,657 = 10.85

Ratio	Description	The company
Payables turnover	An activity ratio calculated as revenue divided by payables.	Lowe's Cos. Inc.'s payables turnover increased from 2011 to 2012 but then declined significantly from 2012 to 2013.

Working Capital Turnover

	Feb 1, 2013	Feb 3, 2012	Jan 28, 2011	Jan 29, 2010	Jan 30, 2009	Feb 1, 2008
Selected Financial Data (USD $ in millions)
Current assets	9,784	10,072	9,967	9,732	9,251	8,686
Less: Current liabilities	7,708	7,891	7,119	7,355	8,022	7,751
Working capital	2,076	2,181	2,848	2,377	1,229	935
Net sales	50,521	50,208	48,815	47,220	48,230	48,283
Working Capital Turnover, Comparison to Industry
Lowe's Cos. Inc.¹	24.34	23.02	17.14	19.87	39.24	51.64
Industry, Consumer Services	–	59.27	36.23	35.35	38.82	93.08

Source: Based on data from Lowe's Cos. Inc. Annual Reports

2013 Calculations

¹ Working capital turnover = Net sales ÷ Working capital
= 50,521 ÷ 2,076 = 24.34

Ratio	Description	The company
Working capital turnover	An activity ratio calculated as revenue divided by working capital.	Lowe's Cos. Inc.'s working capital turnover improved from 2011 to 2012 and from 2012 to 2013.

Average Inventory Processing Period

	Feb 1, 2013	Feb 3, 2012	Jan 28, 2011	Jan 29, 2010	Jan 30, 2009	Feb 1, 2008
Selected Financial Data
Inventory turnover	5.87	6.01	5.87	5.72	5.88	6.34
Average Inventory Processing Period (no. of days), Comparison to Industry
Lowe's Cos. Inc.¹	62	61	62	64	62	58
Industry, Consumer Services	–	35	35	35	35	36

Source: Based on data from Lowe's Cos. Inc. Annual Reports

2013 Calculations

¹ Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 5.87 = 62

Ratio	Description	The company
Average inventory processing period	An activity ratio equal to the number of days in the period divided by inventory turnover over the period.	Lowe's Cos. Inc.'s average inventory processing period improved from 2011 to 2012 but then slightly deteriorated from 2012 to 2013 not reaching 2011 level.

Average Receivable Collection Period

	Feb 1, 2013	Feb 3, 2012	Jan 28, 2011	Jan 29, 2010	Jan 30, 2009	Feb 1, 2008
Selected Financial Data
Receivables turnover	–	–	–	–	–	–
Average Receivable Collection Period (no. of days), Comparison to Industry
Lowe's Cos. Inc.¹	–	–	–	–	–	–
Industry, Consumer Services	–	12	12	11	11	11

Source: Based on data from Lowe's Cos. Inc. Annual Reports

2013 Calculations

¹ Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ – = –

Ratio	Description	The company
Average receivable collection period	An activity ratio equal to the number of days in the period divided by receivables turnoverd.

Operating Cycle

No. of days

	Feb 1, 2013	Feb 3, 2012	Jan 28, 2011	Jan 29, 2010	Jan 30, 2009	Feb 1, 2008
Selected Financial Data
Average inventory processing period	62	61	62	64	62	58
Average receivable collection period	–	–	–	–	–	–
Operating Cycle, Comparison to Industry
Lowe's Cos. Inc.¹	–	–	–	–	–	–
Industry, Consumer Services	–	47	47	46	45	47

Source: Based on data from Lowe's Cos. Inc. Annual Reports

2013 Calculations

¹ Operating cycle = Average inventory processing period + Average receivable collection period
= 62 + – = –

Ratio	Description	The company
Operating cycle	Equal to average inventory processing period plus average receivables collection period.

Average Payables Payment Period

	Feb 1, 2013	Feb 3, 2012	Jan 28, 2011	Jan 29, 2010	Jan 30, 2009	Feb 1, 2008
Selected Financial Data
Payables turnover	10.85	11.54	11.22	11.01	11.74	13.00
Average Payables Payment Period (no. of days), Comparison to Industry
Lowe's Cos. Inc.¹	34	32	33	33	31	28
Industry, Consumer Services	–	27	27	27	25	27

Source: Based on data from Lowe's Cos. Inc. Annual Reports

2013 Calculations

¹ Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 10.85 = 34

Ratio	Description	The company
Average payables payment period	An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period.	Lowe's Cos. Inc.'s average payables payment period declined from 2011 to 2012 but then increased from 2012 to 2013 exceeding 2011 level.

Cash Conversion Cycle

No. of days

	Feb 1, 2013	Feb 3, 2012	Jan 28, 2011	Jan 29, 2010	Jan 30, 2009	Feb 1, 2008
Selected Financial Data
Average inventory processing period	62	61	62	64	62	58
Average receivable collection period	–	–	–	–	–	–
Average payables payment period	34	32	33	33	31	28
Cash Conversion Cycle, Comparison to Industry
Lowe's Cos. Inc.¹	–	–	–	–	–	–
Industry, Consumer Services	–	20	20	20	20	20

Source: Based on data from Lowe's Cos. Inc. Annual Reports

2013 Calculations

¹ Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 62 + – – 34 = –

Ratio	Description	The company
Cash conversion cycle	A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period.