Financial Analysis of Walmart
In your paper, address the following four parts in a Word document:
Part 1: (three to five paragraphs)
Summarize the trends in your companys ratio performance over the 3 most recent years. Be sure to address the following ratios included in Appendix C:
Profitability ratios: ROA, ROE, return on investment (ROI).
Liquidity ratios: quick ratio, current ratio.
Debt management ratios: long-term debt to equity, total debt to equity, interest coverage ratio.
Asset management ratios: total asset turnover, receivables turnover, inventory turnover, and accounts payable turnover.
Per share: book value per share.
Part 2: (two paragraphs)
Interpret whether the trend for each ratio (listed in Part 1) is an improvement or a decline in performance for the company.
Create a table that lists each ratio as either a strength or a weakness in the most current year, based on its trend and your interpretation.
Determine the overall financial strength of the company based on the ratios identified as either strengths or weaknesses.
Consider all of the ratios discussed so far. Is the companys strength the fact that the debt management ratios are improving? Or is it that the liquidity ratios are increasing? Is the companys weakness that the turnover ratios are declining? Or is the companys weakness that debt management ratios are weakening?
Categorize the companys overall ratio performance as either strong, neutral, or weak, based on your determination from the ratios.
Part 3: (one to two paragraphs)
Compare your chosen companys ratio performance to the industry competitor ratios in the most recent year based on Appendix D. Be sure to address the following ratios included on Appendix D:
Profitability ratios: ROA, ROE, gross margin, and net margin.
Liquidity ratios: quick ratio and current ratio.
Debt management ratios: long-term debt to equity, total debt to equity, and interest coverage ratio.
Asset management ratios: asset turnover and inventory turnover.
Create a table that lists each ratio as either higher or lower than the average ratio for the competitors in the industry.
Part 4: (one paragraph)
Categorize the companys overall financial performance as either better than average, average, or worse than average compared to the industry based on the ratios.
Interpret which ratios are the most important and explain your reasoning.
Justify your conclusion based on the table you created, your interpretation of which ratios are the most important, and the companys overall ratio performance compared to the industry competitors.
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