Financial Statement Analysis Research Paper Example | Topics and Well Written Essays - 2000 words

Financial Statement Analysis - Research Paper Example 2.1.1 Which three (3) assets are most significant to the company? Using the notes to the financial statements, discuss the accounting methods used to value assets. What method(s) do the companies use to value inventory? What depreciation method(s) do the companies use to value property, plant and equipment? How are accounts receivable valued? The most significant assets of Home in 2010 included merchandise inventory, Property and equipment and other current assets constituting about 26%, 62% and 3% of the total assets respectively. Compared to 2009, the most significant were merchandise inventory, Property and equipment and other current assets constituting about 25%, 63% and 3% of the total assets respectively. The companies appear to have inventories and property as top two most significant assets for both years and this should describe the nature of the industry that they are in. The three most significant assets of Lowe for 2010 would include merchandise inventory, Property and long-term investment constituting about 24.7%, 65.5 and 3% of the total assets respectively. Compared to 2009, the most significant were merchandise inventory, Property and cash and cash equivalents constituting about 25%, 68.2 and 1.9% of the total assets respectively. For Home depot on the other hand, Bother company value their inventory using lower of cost or market under first in first out (FIFO) basis. Both companies used the straight-line depreciation method Receivables are valued by both companies using fair value. The three of the most significant liabilities to HD include the following: Accounts Payable, Accrued Expenses and Long-term Debt. For HD There have been no significant change to liabilities from 2009 to 2010 except on deferred tax which decreased by 15%. The three of the most significant liabilities to LOW include the following: