Sears V.S Walmart Essay

943 WordsJul 7, 20134 Pages
1. What ratios are MOST important in assessing current and predicting future value creation for Sears? For Wal-Mart? Sears Sears grew up to the world’s largest retailer by expanding annual sales through diversifying sale products, such as apparel, cosmetics, jewelry, electronics, household appliances, cookware, bedding and hand-tools. This article shows that Sears suffered from a cost increase in 1997, including lawsuits, credit collectibles and sales in Mexico. Besides, the flexible payment facility that Sears offered is also a reason for cost increase. These problems brought Sears with bad debt and hence decreased the cash flow. The problems of the company came from the liquid market security, so I emphasize the flowing concepts:…show more content…
* Quick ratio Wal-Mart Wal-Mart was founded in 1962 and has the ROE of 20%. Wal-Mart also offers store Credit Card, but unlike Sears, it is Chase Manhattan Bank rather than its own credit company. Wal-Mart also boosts the annual sale by diversifying products as Sears does, but Wal-Mart also has different stores to target at the customers of various market segments, such as Wal-Mart Discount Store, Wal-Mart Supercenters and Sam’s Clubs. In order to measure how the performance of the Wal-Mart now and in the future, (Wal-Mart wants in low price and low cost) we need to analysis some financial ratio from the number on books. 1. Profit Margin, (Net Income / Total Revenue) 2. Asset Turnover rate (Revenue/ Asset) this ratio can measure how efficiency Sears to use its asset for revenue. 3. DEBT to Equity Ratio ( Total liability/ equity) 4. Leverage Ratio ( Long Term Debt / Shareholder) 5. ROA (Net Income / Total Asset), 2. Do you agree with Ravi Suria's analysis of the credit risks associated with Amazon bonds ? 1 In Ravi Suria’s analysis, “we believe that the current cash balances will last the company through the first quarter of 2001.” According to Exhibit 12c the cash flow statement, in contrast, the cash balance could last for the first quarter of 2001, when it suffered from 407 losses in operating activities, though positive in investing and

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