Walmart Case Study

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Case Study: Walmart

Walmart 2009

ROE: 272%
ROA: 9%
Profit Margin: 3.8
Asset Turn: 2.39
APT: 6.02
C2C: 10.2
ART: 98.5
INVT: 9.19
PPET: $3.99

Amazon 2009

ROE: 17.2%
ROA: 6.7%
Profit Margin: 3.8
Asset Turn: .066
APT: 2.58
C2C: 11.4
ART: 19.45
INVT: 8.74
PPET: $19

Walmart has a higher return on equity and a higher return on asset compared to Amazon. It can be assessed that Walmart has better overall performance than Amazon. Equity return is dramatically higher for Walmart (272%) compared to Amazon’s 17.2%. Amazon has a lower accounts payable turnover therefor the company is more efficient than Walmart. Profit margins are the same and Walmart has a higher asset turnover. Walmart has a higher ART so it collects money quicker. Inventory is turned slightly quicker with Walmart. Amazon has a better PP&E turnover with every $1 of PP&E supporting $19 of sales compared to Walmarts $3.99.

Being one of the largest companies in the world Walmart has more facilities, inventory, transportation involved in its business. Information is the biggest drive in performance and it seems that Amazon has invested much of its resources into it (1.24 billion). Amazon has advantages on pricing due to its lower expenses and its online service. Walmart has an advantage on sourcing due to being able to bulk buy products.

The main metrics that would be affected by Walmarts move into smaller urban market would be facility-related and inventory metrics. Product variety will be an issue, as Walmart will move into smaller facilities that store fewer inventories. One of Walmarts main advantages over competitors is the variety of products in their stores. An urban environment also has a different market that adapts differently to certain products. Metrics such as seasonal inventory, obsolete inventory, and inventory turns might be affected by Walmart’s move.
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