Essay Wal-Mart Financial Analysis - Fin515

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Wal-Mart Financial Analysis
Danny J. Saldana
FIN515
August 27, 2012 Professor David Felsberg

I have chosen Wal-Mart as my company to do a financial analysis on. In my financial analysis I will look will be reviewing Wal-Marts financial ratios for years 2010 and 2005. I will also be looking at Target’s financial ratios for the same years to determine how Wal-Mart is doing within its industry.

(All numbers are in thousands)
Liquidity ratios

Current ratio - Measures whether or not a firm has enough resources to pay its debts over in the short-term.
Current ratio = Current assets / Current liabilities

2010:
Wal-Mart - $51,893,000 / $58,484,000 = .89
Target - $17,213,000 / $10,070,000 = 1.71
Surprisingly, at least to
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It takes all expenses into account.
Net profit margin = Earnings after interest and taxes / sales

2010:
Wal-Mart = $16,389,000 / $421,849,000 = 3.89%
Target = $2,929,000 / $68,466,000 = 3.26%
After all expenses are taken into account, the profit margin narrows considerably between Wal-
Mart and Target.

2005:
Wal-Mart = $11,231,000 / $312,427,000 = 3.59%
Target = $2,787,000/ $57,878,000 = 4.82%

Gross profit margin - The gross profit margin measures the gross profit earned on sales. The gross profit margin considers the cost of goods sold, but does not include other costs.
Gross profit margin = (Revenues – Cost of goods sold) / Sales

2010:
Wal-Mart = ($421,849,000 - $307,646,000) / $421,849,000 = 27.07%
Target = ($68,466,000 -$48,306,000) / $68,466,000 = 29.45%

2005:
Wal-Mart = ($312,427,000 - $240,391,000) / $312,427,000 = 23.06%
Target = ($57,878,000 -$40,106,000) / $57,878,000 = 30.71%

Return on total assets - Return on total assets is a measure of how effectively the company's assets are being used to generate profits.
Return on total assets = Earnings after interest and taxes / Total assets

2010:
Wal-Mart = $16,389,000 / $180,663,000 = 9.07%
Target = $2,920,000 / $43,705,000 = 6.68%

2005:
Wal-Mart = $11,321,000 / $138,187,000 = 8.19%
Target = $2,920,000 / $43,705,000 = 6.68%

Return on equity - Return on equity is the bottom line measure for

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