apos;s instead of Home Depot.
             If I were to extend short-term credit to one of these companies, it would be Home Depot. Both companies perform well on short-term liquidity measures. The first measure I looked at was the current ratio. For the past fiscal year, Lowe's has a current ratio slightly better than that of Home Depot, at 1.27 vs. 1.39, but over the course of the past five years, Home Depot has had the better current ratio for the other four years. This means that they have been more consistently in a better position to cover their current liabilities. Despite the recent increase in long-term debt that they have undertaken, their current ratio remains strong and thus their ability to cover current liabilities does not appear to be negatively impacted by the new long-term debt.
             I also looked at the inventory turnover. Both companies have seen a slight deterioration over the past five years in their inventory turnover, which may be a function of their expansion. I would suggest that this ongoing turnover deterioration implies expansion into increasingly marginal markets, either smaller cities or second locations in existing markets. Home Depot has consistently shown a better inventory turnover than has Lowe's over the past five years. This may reflect a better inventory mix in their stores. Combined with the lower average ticket, it suggest perhaps that Home Depot carries less low-volume, high-end merchandise than does Lowe's. If I were extending short-term credit, I would prefer the company have more inventory that turns over as it should, in most years, result in a better current ratio.
             I also looked at interest coverage. Home Depot in the past year added a significant amount of debt, which lowered the
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