Walmart Financial Ratios

A snapshot of the Net Margins for Wal-Mart Stores Inc. is shown below: Net Margin Wal-Mart 2010 3.90% 2011 3.50% 2012 3.60%

Financial ratios are important in assessing the two companies’ performances. Referring to Exhibit A and B, we see that Sears relied heavily on debt financing. Although its 1997 ROE was high, it had a 300 days cash conversion cycle and a slow A/R turnover ratio. After evaluating various ratios, we concluded that the driving force behind Sears’ profitability was its proprietary card business. For a retailer, a strategy of using flexible payment options to boost sales is not a viable long term solution. The slow A/R turnover and negative operating cash flow cause concerns. On the other hand, Wal-Mart had a quick cash conversion cycle of 91 days, and a working capital turnover of 24/yr (vs.10/yr for Sears). These ratios represent a retail company with sound fundamental strategies, as well as the implementation and execution of those strategies. The financial ratios gave us insights into the companies’ operating and financing strategies, putting the two companies’ annual results into

In this section, vital financial ratios of Target Corporation is computed to evaluate its financial performance. Also, it will explain how the principal of finance “Market price reflects information” is justified through the explanation of Target’s ratio analysis. (The evaluated ratios are compared with 2015 ratios to better understand the specific ratio’s although the company would publish its financial statement for 2015 in coming April).

They may have some good long term prospects that they can borrow against to meet their current obligations. Overall, liquidity is not a strength for Walmart due to both low quick ratio and current ratio.

The Wal-Mart company was established on July 2, 1962 in Rogers, Arkansas (History Timeline). The company was based on the vision of Sam Walton, who believed in giving his customers the lowest prices, anytime, anywhere. By 1967 the Walton family owned 27 different stores, and in 1969 they officially incorporated, becoming Wal-Mart Stores, Inc. Just a year later in 1970 Wal-Mart went National, proving the wide spread appeal of Sam Walton's beliefs (History). This same year Wal-Mart became a publicly traded company, with its first shares priced at 16.50. A short year later the company was listed in The New York Stock Exchange (History Timeline). The 80's were a major success for this company. In 1983 the first Sams Club opened, this was and still is a store that sells product in bulk to small businesses and individuals. In 1988 the first Wal-Mart Super center opened. The Super center combined a full scale supermarket with general merchandise to create one stop shopping convenience (History). In 1992 the company suffered a hard hit when Sam Walton passed away at the age of 74. Although they lost the man at the heart of the company they were determined to carry on with his vision, and so they did. In 1996 they opened their first stores in China (History Timeline). By 2002 they reach the top of the Fortune 500 ranking of Americas largest companies. In 2012 Wal-Mart celebrated 50 successful years of business. Today the company employs 2.2 million associates worldwide and serves

First of which, is the current ratio. It has been rapidly declining since 2000. To me this indicates that there is a liquidity issue. Each year their trade debt increase exceeds the increase of net income for the company. As a result, the working capital has taken a nosedive from $58,650 in 2002 to only $5,466 in 2003.

Wal-Mart’s current ratio is 0.93, Target current ratio is 1.11 and the industry ratio is 3.04.

This report is to compare the financial statements of Target and Walmart for last three years and analyze its financial performance. The data has been downloaded from www.sec.gov for analysis. This report initially compares the financial healthiness of both firms based on the financial ratios and then discusses the factors that could have impacted these firms’ finances in last three years. This report also briefly discusses the differences in financial statements. Finally, this report concludes with a recommadenation to investor.

The organization that I have chosen for the purpose of this corporate finance analysis is Wal-Mart. As is well known, Wal-Mart is the global market leader of

Liquidity In analyzing liquidity of the company, the current ratio is not very telling of a falling company. The company increased its ratio throughout the period of the income statement thus building upon its company assets and allowing for a 6-1 ratio of assets over its liabilities. This implies the company is still able to operate sufficiently even though it did not make its optimum current ratio of about 8-1. However, when one takes the inventory out of the equation with the quick ratio, the numbers show the true strength of short term liquidity. The numbers are still good, and do not indicate failure – but are

In order to measure how the performance of the Wal-Mart now and in the future, (Wal-Mart wants in low price and low cost) we need to analysis some financial ratio from the number on books.

In 1962, Wal-Mart was built sometime by Sam Walton in Roger, Arkansas. Wal-Mart has 5,100 stores and clubs all over the United States and a sum of 8,300 unit's global. The company was able to employ something like over 2 million associates from all over the world and about 2.4 million in the United States. Wal-Marts average annual total income rate was somewhat in excess of 10% for the three years from the fiscal year that is ending 2009 to the fiscal year ending 2011 (Blanchard, 2008). Research shows that they also had what was known as a stock split of 100 %; Wal-Mart was able to see this split 12 times all through the eras of 1973 through 2002. They have received many awards and were categorized 5th in Fortune magazine's "Global Most Well-regarded All-Stars" as the third most appreciated corporation in America (Wal-Mart, 2013)

He instilled a spirit of well being and created a company where 70% of its managerial staff was recruited from hourly workers in the stores (ICMR 2003). Transferring this particular work culture to foreign countries has been a struggle for local employees. Walmart Stores, Inc. has had to adjust their company culture to transition more smoothly into certain markets. Walmart’s rapid international growth created a lack of quality management. Managers in foreign countries were unable to speak the language of that particular country, therefore creating a swarm of problems. The language barrier was not the only issue, cultural differences accounted for the majority of the issues. It wasn’t until the company chose to decentralize management authority from their headquarters to their International division that each leader of their market was able to freely manage their operations and merchandising (Zellner, Schidt, 2001). Walmart has attempted to recruit top management for each market from the host country. For example, Rai Jain the Managing Director and CEO of Walmart India is a native of India. However not all of the market leaders are from the host country. An example would be Steve Dacus, an American who is the President and CEO of Walmart Japan (Walmart.com).

Microsoft’s times interest earned ratio is 87.7, showing that this firm is very successful especially before any interest or tax is deducted from its overall earnings. Apple’s times interest earned ratio could not be calculated due to the fact that their data didn’t indicate a specific interest expense to complete the equation. Another solvency ratio is the debt to equity ratio (I); taking the firms total liabilities and dividing that total by owners’ equity. Currently Microsoft’s debt to equity ratio is 0.8, showing that there is less risk among the firm’s financials. This also means that the company doesn’t rely too much on external lenders. Apple’s debt to equity ratio seems to also be within good standing because it is .5, so it doesn’t rely too much on external lenders either. Overall, both liquidity and solvency ratios represent how financially stable this company is within converting its current debt into cash as well as its long-term debt. In most cases Apple Inc. falls behind Microsoft Corp. within its short and long term debt solvency.

Wal-Mart’s primary competition in US includes department stores of the likes of Target and Kmart. Costco offers competition to Sam Club format of Wal-Mart. In niche small markets, dollar stores are offering strong competition to Wal-Mart.