Competitor's Ratios And Analysis

1091 Words Feb 14th, 2016 5 Pages
Competitor’s Ratios and Analysis Gross margin is the first probability ratio we selected to measure and analyze the financial status of Best Buy’s competitors. The respective gross margins of the companies in this analysis are 26.38% for Walmart, 27.54% for Amazon, and 45.92% for Apple. Return on Assets (“ROA”) is a profitability ratio that measures the how effective a company’s assets are in facilitating the company’s revenue (Crosson & Needles, 2008). The respective ratios for Walmart, Amazon, and Apple are .08, 0, and .24. In terms of inventory turnover, Walmart and Amazon have similar ratios of 7.85 and 7.34, most likely because they both carry a wide variety of products that will lead to a moderate rate of inventory turnover. Apple, on the other hand, has an inventory turnover ratio of 107, again symptomatic of its role as a manufacturer and retailer of electronic products. For receivables turnover, Walmart has a turnover of 69.04, Amazon of 23.5, and Apple of 8.37. The effectiveness of a company in this area is determined by the length of time it extends its customers credit (Crosson & Needles, 2008). The debt-to-equity and debt-to-asset ratios measure how effective a company is in financing itself in terms of debt and equity (Liberty University School of Business, 2016). Walmart has ratios of 1.58 and .5 respectively, showing that the company has low levels of debt compared to its equity and assets. Amazon has a 2.97 debt-to-equity ratio and a .75 debt-to-assets…

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