Description
Purpose of Assignment
The purpose of this assignment is to help students gain a better understanding of the financial statements used for corporate financial reporting and the key ratios used to make business decisions.
Assignment Steps
Select a Fortune 500 Company from one of the following industries:
- Pharmaceutical
- Energy
- Retail
- Automotive
- Computer Hardware
Review the balance sheet and income statement in the company's 2015 Annual Report.
Calculate the following ratios using Microsoft® Excel®:
- Current Ratio
- Quick Ratio
- Debt Equity Ratio
- Inventory Turnover Ratio
- Receivables Turnover Ratio
- Total Assets Turnover Ratio
- Profit Margin (Net Margin) Ratio
- Return on Assets Ratio
Analyze in 1,050 words why each ratio is important for financial decision making.
Submit your analysis as well as your calculations.
Note: two files to submit are required -- one MS Word File and one MS Excel spreadsheet
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Running head: WALMART FINANCIAL RATIO ANALYSIS
Walmart Financial Ratio Analysis
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Institution
Date
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WALMART FINANCIAL RATIO ANALYSIS
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Walmart Financial Ratio Analysis
Walmart is a leading retailer in the world as it offers the broadest assortment of products
through more than 11,600 retail units. The following discussion involves some liquidity, financial
leverage, turnover, and profitability ratio analyses of the company's data for the period ending 31st
January 2015.
The quantitative liquidity relations include the current and quick ratios (Healy and Palepu,
2012). The quotients measure the ability of the company to meet its current obligations. A
company should ensure that it does not suffer from lack of or excess liquidity. The failure of an
organization to achieve its dues owing to lack of sufficient cash will result in a reduced
creditworthiness or loss of creditors' confidence and, even in legal misgivings, may result in the
closure of a company. That said dividing the current assets by the current liabilities yields the
current ratio. The figure for the company is 0.97, indicating that there was some margin of safety
for its creditors during the period. Conjointly, the percentage is close to 100, and thus it is okay. A
ratio of more than 100 percent implies that the current assets are more than the liabilities, meaning
that a firm in such a situation would be able to meet its short-term obligations. The current ratio
for Walmart for the year is recommended because there is the indication that there were no idle
assets. The assets were yielding value for the company and, hence, the management was competent
at establishing some balance between high and lack of liquidity. A similar logic is that even if the
value of curr...