Wal-Mart Financial Analysis - Fin515
Wal-Mart Financial Analysis
Danny J. Saldana
FIN515
August 27, 2012 Professor David Felsberg
I have chosen Wal-Mart as my company to do a financial analysis on. In my financial analysis I will look will be reviewing Wal-Marts financial ratios for years 2010 and 2005. I will also be looking at Target’s financial ratios for the same years to determine how Wal-Mart is doing within its industry.
(All numbers are in thousands)
Liquidity ratios
Current ratio - Measures whether or not a firm has enough resources to pay its debts over in the short-term.
Current ratio = Current assets / Current liabilities
2010:
Wal-Mart - $51,893,000 / $58,484,000 = .89
Target - $17,213,000 / $10,070,000 = 1.71
Surprisingly, at least to me, it seems as though Target is better equipped to handle it’s short-term obligations. 2005:
Current ratio = Current assets / Current liabilities
Wal-Mart - $43,824,000 / $48,826,000 = .90
Target - $14,405,000 / $9,588,000 = 1.50
Quick ratio – The Quick ratio helps gauge your immediate ability to pay your financial obligations. This is the amount the company could pay if payment was demanded immediately.
Quick ratio = (Current assets – Inventory) / Current liabilities
2010:
Wal-Mart – ($51,893,000 - $36,318,000) / $58,484,000 = .27
Target – ($17,213,000 - $7,596,000) / $10,070,000 = .96
Target has much less of its assets tied up in inventory (%). It is much more liquid.
2005:
Quick ratio = (Current assets – Inventory) / Current liabilities
Wal-Mart – ($43,824,000 - $32,191,000) / $48,826,000 = .24
Target – ($14,405,000 - $5,838,000) / $9,588,000 = .89
Activity ratios
Inventory turnover - This ratio measures the number of times your inventory is turned over during the year. The higher the number is, the better your use of inventory.
Inventory turnover = Sales / Inventory
2010:
Wal-Mart - $421,849,000 / $34,739,000 = 12.14
Target - $68,466,000 / $7,596,000 = 9.01
Wal-Mart does a slightly better
Danny J. Saldana
FIN515
August 27, 2012 Professor David Felsberg
I have chosen Wal-Mart as my company to do a financial analysis on. In my financial analysis I will look will be reviewing Wal-Marts financial ratios for years 2010 and 2005. I will also be looking at Target’s financial ratios for the same years to determine how Wal-Mart is doing within its industry.
(All numbers are in thousands)
Liquidity ratios
Current ratio - Measures whether or not a firm has enough resources to pay its debts over in the short-term.
Current ratio = Current assets / Current liabilities
2010:
Wal-Mart - $51,893,000 / $58,484,000 = .89
Target - $17,213,000 / $10,070,000 = 1.71
Surprisingly, at least to me, it seems as though Target is better equipped to handle it’s short-term obligations. 2005:
Current ratio = Current assets / Current liabilities
Wal-Mart - $43,824,000 / $48,826,000 = .90
Target - $14,405,000 / $9,588,000 = 1.50
Quick ratio – The Quick ratio helps gauge your immediate ability to pay your financial obligations. This is the amount the company could pay if payment was demanded immediately.
Quick ratio = (Current assets – Inventory) / Current liabilities
2010:
Wal-Mart – ($51,893,000 - $36,318,000) / $58,484,000 = .27
Target – ($17,213,000 - $7,596,000) / $10,070,000 = .96
Target has much less of its assets tied up in inventory (%). It is much more liquid.
2005:
Quick ratio = (Current assets – Inventory) / Current liabilities
Wal-Mart – ($43,824,000 - $32,191,000) / $48,826,000 = .24
Target – ($14,405,000 - $5,838,000) / $9,588,000 = .89
Activity ratios
Inventory turnover - This ratio measures the number of times your inventory is turned over during the year. The higher the number is, the better your use of inventory.
Inventory turnover = Sales / Inventory
2010:
Wal-Mart - $421,849,000 / $34,739,000 = 12.14
Target - $68,466,000 / $7,596,000 = 9.01
Wal-Mart does a slightly better
References: Financial ratios. (2011). Retrieved from http://www.dinkytown.net/java/Ratios.html Financial ratios Mayo, H B. (2007). Basic finance: an introduction to financial institutions, investments, and management. Thomas South-Western. Wal mart stores income statement. (2010). Retrieved from http://finapps.forbes.com/finapps/jsp/finance/compinfo/IncomeStatement.jsp?tkr=WMT Wal mart stores balance sheet. (2010). Retrieved from http://finapps.forbes.com/finapps/jsp/finance/compinfo/FinancialIndustrial.jsp?tkr=WMT Wal mart stores earnings estimates. (2010). Retrieved from http://finapps.forbes.com/finapps/jsp/finance/compinfo/CashFlows.jsp?tkr=WMT