Attached.

Running Head: FINANCIAL RATIO ANALYSIS OF WALMART Inc.

Financial Ratio Analysis of Wal-Mart Inc
Name
Professor
Course
Date

1

FINANCIAL RATIO ANALYSIS OF WALMART Inc.

2

FINANCIAL RATIO ANALYSIS OF WALMART Inc.FOR THE YEAR 2015
FINANCIAL RATIOS ANALYSIS FOR WALMART Inc. FOR THE YEAR 2015

in millions
$
Current Ratio

Current Assets

:

63,278

‗

0.97

=

0.28

‗

1.50

‗

8.11

=

72.18

$
Current Liabilities

Quick Ratio

(Current assets-Inventory)

65,272

:

$ (63278 - 45141)
$

Current Liabilities

65,272

$
Debt-to-Equity ratio

Total Debt

:

122,312
$

Total Equity

81,394

$
Inventory Turnover

Cost of goods sold

:

Average inventory

Receivables turnover

Net credit sales

365,086
$(44858 +45141)2

:

$

FINANCIAL RATIO ANALYSIS OF WALMART Inc.

3
485,651
$

Ave. accounts receivables

6,728

$
Total assets turnover

Sales

:

485,651

‗

2.38

‗

0.03

=

0.07

$
Total Assets

203,706

$
Profit Margin

Net income

:

14,694
$

Net Sales

485,651

$
Return on Assets

Net Income

:

14,694
$

Average Total Assets

Current Ratio
Current ratio= Current Assets/ Current liabilities
Current ratio= 0.97

204,229

FINANCIAL RATIO ANALYSIS OF WALMART Inc.

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Current ratio measures the ability with which a company is able to pay for its short-term
liabilities. This ratio measures the liquidity of Walmart, which is the ability of Walmart to
convert its current assets into cash in order to cover its short-term liabilities. Walmart has a
current ratio of 0.97, meaning that Walmart has 0.97 times less current assets than current
liabilities meaning that it has fewer current assets in place to cover to its short-term obligations
(Tracy, 2012).
Investors would look at this ratio to measure the vulnerability of Walmart to unexpected
bumps in the business environment in the economy as it shows the level of liquidity and ability
of Walmart to meet short-term obligations through its current assets.
Quick Ratio
Quick Ratio = ( Current Assets – Inventory)/ Current Liabilities
Quick ratio =0.28
Also, known as an acid test ratio, quick ratio measures the ability of a company to cover
its current liabilities with quick assets only when they come due. Stakeholders would look at this
ratio to determine the ability of a company to meet its short-term liabilities by taking into
account current assets without the inclusion of inventory.WalmartStores Inc. has a quick ratio of
0.28, meaning that it has lesser value of quick assets than its current liabilities, an indication that
Walmart has a lower ability to cover its obligations and would be forced to sell off its capital or
long-term assets in order to meet its liabilities(Walmart Stores Inc Annual Report, 2015).
Debt-to-Equity ratio
Debt equity ratio = Total Debt/ Total Equity

FINANCIAL RATIO ANALYSIS OF WALMART Inc.

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Debt to equity ratio = $1.50
Debt-to-equity ratio measures the financial leverage of Walmart and shows the amount of
debt Walmartis using to finance its assets compared to the value of shareholders’ equity.
Walmarthas a debt-to-equity ratio of 1.50, meaning that the company uses more debt to finance
its assets relative to the amount of equity contributed by its shareholders (Walmart Stores Inc
Annual Report, 2015).
This ratio is important to an investor as it clearly shows the relationship ...