Financial Ratio Analysis

User Generated

RET2015

Business Finance

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

Unformatted Attachment Preview

Financial Ratio Analysis Grading Guide FIN/571 Version 9 Foundations of Corporate Finance Copyright Copyright © 2017, 2016, 2013 by University of Phoenix. All rights reserved. University of Phoenix® is a registered trademark of Apollo Group, Inc. in the United States and/or other countries. Microsoft®, Windows®, and Windows NT® are registered trademarks of Microsoft Corporation in the United States and/or other countries. All other company and product names are trademarks or registered trademarks of their respective companies. Use of these marks is not intended to imply endorsement, sponsorship, or affiliation. Edited in accordance with University of Phoenix® editorial standards and practices. Financial Ratio Analysis Grading Guide FIN571 Version 9 Individual Assignment: Financial Ratio Analysis 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. Resources Required Microsoft® Excel® Content Met Partially Met Not Met Total Available Total Earned 5 #/5 Partially Met Not Met Comments: Selected a Fortune 500 Company from one of the following industries: • • • • • Pharmaceutical Energy Retail Automotive Computer Hardware Reviewed the balance sheet and income statement in the company’s 2015 Annual Report. Calculated 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 Analyzed in 1,050 words why each ratio is important for financial decision making. Writing Guidelines The paper—including tables and graphs, Met Comments: 2 Financial Ratio Analysis Grading Guide FIN571 Version 9 Writing Guidelines Met Partially Met Not Met Total Available Total Earned 3 #/3 8 #/8 headings, title page, and reference page—is consistent with APA formatting guidelines and meets course-level requirements. Intellectual property is recognized with in-text citations and a reference page. Paragraph and sentence transitions are present, logical, and maintain the flow throughout the paper. Sentences are complete, clear, and concise. Rules of grammar and usage are followed including spelling and punctuation. Assignment Total Additional comments: # Comments: 3
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Running head: WALMART FINANCIAL RATIO ANALYSIS

Walmart Financial Ratio Analysis
Name
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...


Anonymous
Really useful study material!

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