Financial Statment for Wal-Mart Stores Inc.

Total asset turnover : This ratio measures the efficiency of a company’s use of its assets

These ratios will help us see how effective a company is at using their sales or assets and turning this into income.

rising ratio is desirable, while the reverse is also true. Comparing Company G’s Rate of Return

Rate of return on total assets: This ratio compares the operating income against the total net assets. This can show how effective the company is in utilizing its assets prior to paying taxes. To determine this ratio take the net income and add the interest expense and divide those by the average total assets. In year 11 that rate was 12.30% and year 12 only showed a 2.48% increase to 14.78%. This rate has stayed consistent between the last 2 years and is trending in the right direction even if it is slow. I would consider this strength at this time because it is below the upper quartile of 17.2 but above the median quartile and lower quartiles of 12.3 and 8.6.

Ratio analysis is a very useful tool when it comes to understanding the performance of the company. It highlights the strengths and the weaknesses of the company and pinpoints to the mangers and their subordinates as to which area of the company requires their attention be it prompt or gradual. The return on shareholder’s fund gives an estimate of the amount of profit available to be shared amongst the ordinary shareholders; where as the return on capital employed measures an organization 's profitability and the productivity with which its capital is utilized. Return on total assets is a profitability ratio that measures the net income created by total assets amid a period.

Profitability measure earning ratio to the cost incurred and one of the formulas are the profit margin which looks at the net income / net sales. Amazon numbers for 2008 645/19166=3.37% and in 2007 476/14835= 3.21% this looks how sales at Amazons are converted into profit, the bottom line. Another is asset turnover and it deals with how Amazon uses it assets to generate sales and the formula is 19166/8314+6485/2=2.60 times it makes a sales for every dollar it had invested in assets for 2008. In 2007 14835/6485+4363/2=2.74 times these are very good number of asset turnovers. Return on assets deals with how profitable the company is and its formula is: 645/8314+6485/2= 8.71% for 2008 and in 2007 476/6485+4363/2= 8.78 % very profitable numbers. Return on Common Stockholders Equity is how much income is generated for the Stockholders and 645/1197+2675/2=.33 is generated for 2008 and 476/1197+476/2= 58.5 for 2007 and it was an excellent year for Stockholders . Earning per share is the net profit earned on each share of common stock. It reveals the amount the business earned on their stock share investments: 645/428+416/2=1.52 for 2008 and for 2007 476/416+414/2=1.15, is also good. Price ratio is a glimpse into the future of the company. Price Earning

{. How many consecutives years the company has been profitable, its current ration and its ROE

Return on equity (ROE), or measure of profitability a company can acquire using shareholder investments is an important tool (Gitman, 2015). Aetna Inc. ROE of 17.01% is comparable to market leader Humana at 10.86% (AET: AETNA INC-NEW Stock Quote & Analysis - Zacks.com, n.d.). Return on Assets (ROA) or a measure of how profitable a company is relative to total assets is a ration that must be compared within industries (Gitman, 2015). Aetna Inc. ROA at 4.7, slightly below Humana’s at 5.25, but us average for the industry (AET: AETNA INC-NEW Stock Quote & Analysis - Zacks.com,

The cash conversion cycle measures the time between a firm spending cash and collect cash from the sales. The longer the time period the greater the potential need for working capital to support the firm. Generally, lower cash conversion cycle times are seen as favorable. The cash conversion cycle starts with Lawrence Sports purchasing the inputs for the goods they make from Garner Products and Murray Leather Works. The purchases will be on credit, and payment will be due at a point in the future. The goods are then made and shipped to Mayo, the payments to Garner Products and Murray Leather Works are due before the payments are received from Mayo, with Mayo creating further delays.

The second ratio represents the fraction of EBIT (i.e., operating profit) that the firm keeps after financing

The final ratio we will analyze is the average collection period which measures the time it takes a firm to receive payments after a sale has been made. The average collection period was 55 days for 2001 and 42 days for 2000. While these numbers seem to be very high the reader needs to remember that they are dealing with a large ticket item and financing is usually arranged and payments from the finance company could take more time than cash payments that are normal in the traditional retail marketplace.

Competitor's Ratios and Analysis. Using relative comparative analysis (Table 6), competing firms Google and Amazon have unique performance over fiscal years (FY) 2014-2016. Measuring profit performance using profitability ratios, Google has a greater gross profit margin than Apple and retains an average of 61 cents for every dollar spent on direct sales. However, Apple outperforms Google on both return on assets and return on equity ratios. Meaning, Apple retains 14 cents for every dollar in assets in comparison to Google’s 11 cent retained average. In addition, Apple retains a net average of 35 cents for every dollar invested by common shareholders.

Which of the following ratios measures how efficiently and effectively a firm is using its assets to generate profits?

The calculation of ratios is the calculation technique for analyzing a company’s financial performance that divides or standardize one accounting measure by another economically relevant measure. Financial ratios can be used as a tool to demonstrate financial statement users for making valid comparisons of firm operating performance, over time for the same firm and between comparable companies. External investors are mostly interested in gaining insights about a firm’s profitability, asset management, liquidity, and solvency.

Firms and Companies include ‘Ratios’ in their external report to which it can be referred as ‘highlights’. Only with the help of ratios the financial statements are meaningful. It is therefore, not surprising that ratio analysis feature are prominently in the literature on financial management. According to Mcleary (1992) ratio means “an expression of a relationship between any two figures or groups of figures in the financial statements of an undertaking”.