Description
Write a 1,050-word comparative analysis using the financial statements of Amazon.com, Inc. presented in Appendix D, and the financial statements for Wal-Mart Stores, Inc., presented in Appendix E, including the following:
- Compute these 2014 values for each company based on the information in the financial statements:
- Inventory turnover (Use cost of sales and inventories)
- Days of inventory
- Conclusions concerning the management of the inventory can you draw from this data.
Show work on Excel® spreadsheet and submit with analysis
Explanation & Answer
Find the attached documents,Best Regards.
1
Running Head: FINANCIAL ANALYSIS
Financial Analysis
Name
Institutional Affiliation
2
FINANCIAL ANALYSIS
Inventory turnover is the ratio that shows the number times in a year in which a business
can convert its inventories into sales. It ensures that a business has enough inventories as
compared to its sales level. A high ratio indicates that a firm is performing better since many
customers come to buy as shown by increased sales implying that much of the stock is sold. A
low turnover ratio indicates that few customers are buying from the firm and thus the sales are
few while inventory levels are still high.
The receivables turnover of Wal-Mart Corporation is almost the same as that Amazon,
but it is slightly higher. This means that Wal-Mart has more sales possibly because it sells most
of its products on cash basis and can therefore extend credit to customers easily. Amazon seems
to be selling more on credit and therefore most of its debtors haven’t paid and therefore cannot
offer and more credit sales thus the low amount of sales. The inventory turnovers are as shown
below:
Inventory turnover =
The cost of Sales
(Beginning Inventory + Ending inventory) / 2
Walmart
=3558069
(43803 + 44858) / 2
= 8.08 Inventory turnover
3
FINANCIAL ANALYSIS
Amazon Inc.
62752
(7411+8299) /2
= 7.99 Inventory turnover
The Wal-Mart inventory turnover could be higher they manage their purchases well.
They only ...
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