Common-Size Income Statement
Lowe’s Cos. Inc., common-size consolidated income statement
Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31).
The analysis of the financial ratios reveals several noteworthy trends and variations over the examined periods.
- Cost of Sales and Gross Margin
- Cost of sales as a percentage of net sales shows a gradual decline from -68.2% in early 2020 to approximately -66.6% to -66.7% in the most recent years, indicating an improvement in cost management. Correspondingly, the gross margin has increased from 31.8% in 2020 to slightly above 33% in subsequent years, reflecting enhanced profitability at the gross profit level.
- Selling, General and Administrative Expenses
- These expenses exhibit a downward trend overall, moving from -21.3% in 2020 to the range of around -18% to -19% in the latest periods. The decline after 2021 suggests an effective control over operating expenses, despite some fluctuations. This decrease bolsters operating efficiency and contributes positively to operating income.
- Depreciation and Amortization
- There is a modest increase in depreciation and amortization costs, rising from -1.75% in 2020 to just over -2% by early 2025, implying increased investment in capital assets or intangible assets whose costs are being systematically expensed.
- Overall Expenses
- Total expenses as a percentage of sales have declined from -23.05% in 2020 to around -20% to -21% in the latest years, driven mainly by reductions in SG&A expenses, though partially offset by increases in depreciation and amortization.
- Operating Income
- Operating income shows an overall positive trend with an increase from 8.75% in 2020 to peaks above 13% in 2024, though a slight decrease to 12.51% occurs in 2025. This suggests improving operational profitability, aligned with better cost controls and margin improvements.
- Interest Expense and Net Interest
- Net interest expense as a percentage of sales increased slightly over the period. Interest expense rose from -1% in 2020 to approximately -1.7% in 2024 and 2025, while interest income remains minimal but shows a slight rise. The increase in net interest expense could imply higher debt levels or increased borrowing costs.
- Loss on Extinguishment of Debt
- This item shows a notable loss of -1.18% only in 2021. No such losses are observed in other years, indicating a one-time financial charge related to debt restructuring or repayment costs during that period.
- Pre-tax Earnings and Net Earnings
- Pre-tax earnings improved from 7.79% in 2020 to peaks around 11.7% and 11.6% in 2024 and 2022, respectively, but with some fluctuations in between. Net earnings similarly rose from 5.93% to about 8.9% in 2024 before a slight dip to 8.31% in 2025, showing an overall profit enhancement reflective of the improved operational results and controlled expenses.
- Income Tax Provision
- The income tax provision as a percentage of net sales has increased from -1.86% to approximately -2.6% to -2.9% across the periods, consistent with higher pre-tax profitability.
In summary, the data depict an entity that has steadily improved its gross profitability through better cost management and maintained tighter control of operating expenses. Increased depreciation and interest expenses suggest capital investments and financing activities that slightly weigh on net profitability. Despite some volatility, the overall earnings before and after tax have shown positive trends, indicating strengthened financial performance over the examined time frame.