Axia College of University of Phoenix
I have chosen to examine the Wal-Mart Corporation for this study. After examining this company's financial statement I have observed that in 2008 this company's liability was 98,906 million, and stockholder's equity was 64,608 million. This resulted in a debit/equity ratio of 1.5.
One year later, 2009, Wal-Mart declared stockholder's equity of 65,285 million, and liability of 98,144 million, which also resulted in a debit/equity ratio of 1.5. This proves that this company is maintaining a stable low ratio and by doing so it makes it less risky for creditors or investors.
While examining the financial statements, more specifically the debit/asset ratio, I have also observed that in 2008 Wal-Mart had liability of 98,906 million, and asset of 163,514 million, which resulted in a debit asset ratio of .6, while in the year 2009 the liability declared was 98,144 million, and asset of 163,429 million which also resulted in a debit asset ratio of .6. Once again this proves stability in the debit/asset ratio in these 2 years by maintaining a steady rate of .6.
In comparison to like companies, Wal-Mart has proven to have a better, and consistent debt/asset ratio. However, Wal-Mart has also kept their stockholders, creditors, and customers informed on their corporate website by keeping them updated with recent activities in the company etc.
After thoroughly examining this company's financial statement, I have observed that three strengths of the financial statements are; that this company discloses financial statements from the early 90’s to present, which allows investors to view the company's development; It show the cash flow statement, so investors can see how much cash the company has to work with, and the financial statements include notes so an investor can follow any accounting differences not readily available by looking at the financial statements.
However, while this...
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