Wal-Mart and Costco
1. Introduction
Wal-Mart
Wal-Mart was founded by Sam Walton on 1962 and it is the largest retailer in the world. The company has three major operations which are Wal-Mart Stores U.S., Sam 's Club, and Wal-Mart International. On 2007, Wal-Mart used this new slogan” Save Money Live Better”. However, there are some critics about their employee life. Wal-Mart exploits their employee’s salary for setting low price to customer. They resisted their worker to build union organization because they tried to prevent from negotiating with employee. Nevertheless, Wal-Mart is still successful in the business because they attract lots of urban and rural consumers.
Costco
Costco was founded by James D. Sinegal and Jeffrey H. Brotman on 1983 and it is the largest membership warehouse club. Their goal is to provide low price products to customer as same as Wal-Mart. The difference between Wal-Mart and Costco is the strategy they use. Costco doesn’t offer plastic bag to customer so customer need to bring bags by themselves. Furthermore, the high order volume is another reason why Costco can lower the cost and price because they can negotiate with supplier.
2. Ratio Analysis
a. Activity Ratios:
It is used to evaluate asset utilization and turnover days. It also implies how well company operates its fixed asset and inventory in operating system.
Conclusion: Costco has really well operating efficiency according to its higher operating ratio. Furthermore, Costco not only maintain the ratio but increase it from 2005 to 2012. By contrast, Wal-Mart has obviously lower ratio in fixed asset turnover because Wal-Mart keeps buy equipment and property for expanding market. To short, Costco has better management in the use of asset and better improvement in the ratio trend.
a. Liquidity Ratios:
It can analyze the ability of paying expense in the short term. The higher current ratio and quick ratio mean the company has higher ability for exchanging asset to cash. The
Wal-Mart
Wal-Mart was founded by Sam Walton on 1962 and it is the largest retailer in the world. The company has three major operations which are Wal-Mart Stores U.S., Sam 's Club, and Wal-Mart International. On 2007, Wal-Mart used this new slogan” Save Money Live Better”. However, there are some critics about their employee life. Wal-Mart exploits their employee’s salary for setting low price to customer. They resisted their worker to build union organization because they tried to prevent from negotiating with employee. Nevertheless, Wal-Mart is still successful in the business because they attract lots of urban and rural consumers.
Costco
Costco was founded by James D. Sinegal and Jeffrey H. Brotman on 1983 and it is the largest membership warehouse club. Their goal is to provide low price products to customer as same as Wal-Mart. The difference between Wal-Mart and Costco is the strategy they use. Costco doesn’t offer plastic bag to customer so customer need to bring bags by themselves. Furthermore, the high order volume is another reason why Costco can lower the cost and price because they can negotiate with supplier.
2. Ratio Analysis
a. Activity Ratios:
It is used to evaluate asset utilization and turnover days. It also implies how well company operates its fixed asset and inventory in operating system.
Conclusion: Costco has really well operating efficiency according to its higher operating ratio. Furthermore, Costco not only maintain the ratio but increase it from 2005 to 2012. By contrast, Wal-Mart has obviously lower ratio in fixed asset turnover because Wal-Mart keeps buy equipment and property for expanding market. To short, Costco has better management in the use of asset and better improvement in the ratio trend.
a. Liquidity Ratios:
It can analyze the ability of paying expense in the short term. The higher current ratio and quick ratio mean the company has higher ability for exchanging asset to cash. The