Liquidity Analysis Of Walmart

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Liquidity:-
Current=Current assets / Current liabilities.
A company's current ratio measures its ability to pay its current debts, defined as those due within one year. It does so by comparing the company's current liabilities with its current assets, meaning those that can be converted to cash within a year or less.
The formula is current assets divided by current liabilities. A value of 1 or higher is preferred. Many value investors consider 1.5 to be an ideal current ratio. Wal-Mart's current ratio comes in a little low at 0.97. Target's is 1.1.
All three companies have current ratios around 1, and the difference between them is insignificant. While a slightly higher current ratio would be good to see from Wal-Mart, its other financial …show more content…

This ratio is the same as the current ratio except it excludes inventories. The ratio concentrates primarily on the more liquid current assets, marketable securities and receivables in relation to current obligation. It shows whether a company’s cash -- along with items that can be quickly converted to cash – is sufficient to cover short-term obligations. Most companies prefer at least a 1-to-1 ratio; firms with smaller ratios need to turn over their inventories faster. So Wal-Mart acid test liquidity in 2014 is 0.24 and in 2015 it is 0.28 they are increasing but they are still not meeting their goals which are 1-to-1 …show more content…

The equation for inventory turnover equals the cost of goods sold or net sales divided by the average inventory.
In Wal-Mart inventory turnover is in 45 days.
Total Asset Turnover:-
Asset Turnover measures how quickly a company turns over its asset through sales. It is calculated as Revenue divided by Average Total Assets. Wal-Mart Stores Inc's Revenue for the three months ended in Jan. 2015 was $129,667 Mil. Wal-Mart Stores Inc's Average Total Assets for the quarter that ended in Jan. 2015 was $202,363 Mil. Therefore, Wal-Mart Stores Inc's asset turnover for the quarter that ended in Jan. 2015 was 0.64.
Net Profit Margin:-
Net profit margin is an indicator of profitability, calculated as net income divided by revenue. Wal-Mart Stores Inc.'s net profit margin improved from 2014 to 2015 but then deteriorated significantly from 2015 to 2016.

Return on Investment:-
Wal-Mart Stores Inc. achieved return on average invested assets of 11.93 % in IV. Quarter, below company average return on investment.
ROI improved compare to previous quarter, due to net income

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