Wal-Mart AnalysisRatio analysis can give both internal and outside customers with a huge measure of information about a firm execution. A ratio analysis was conducted to compile the complete findings of the past 3 years of Wal-Mart. By comparing the balance sheet and income statement the data will show the findings of liquidity, profitability and the market ratios.Walmart’s liquidity ratios trend at an average of .89 for current ratio and .25 for their quick ratio. These liquidity ratios indicate that Walmart does not have enough cash flow to convert their short term debt within one year. To improve this negative trend Wal-Mart would need to decrease their current liabilities or either increase their assets.In the calculations 2015 was the year with the highest account receivable turnover and the lowest in account payable turnover. A high receivables turnover ratio can imply that the company has a high proportion of quality customers that pay off their debts quickly.Based on the findings, Wal-Mart looks to be in trouble. According to the calculations, Wal-Mart is gaining less than 1% of returns. Such a small amount will eventually leave Wal-Mart bankrupt.Profitability ratios are used to determine how well a firm uses its resources to generate income (Eakins, Stanley, William McNally 2013). Generally speaking you want to see the ratios grow because they indicate that the company is using its resources better each year. The operating profit margin is found by dividing the operating profits amount by the sales whereas the net profit margin is found by dividing the net income after tax by the sales. In the case of Wal-Mart, all of the ratios increased over the three year time period. This means that they are consistently improving and more effective in turning resources into a profit. Therefore, there would not be any additional information requested or any investigations needed. Furthermore, investing in this company would be a good risk because the ratios show that it would continue to be profitable.According to (Eakins, Stanley, William McNally 2013) market ratios “are ratios that are based on the firm’s security prices, such as stock price.” Market ratios involves two ratio earning per share and price to earnings, the can be obtained and calculated from the firm’s financial statement. Potential and current investors’ use market ratios to check how a company’s current share price stacks up in the market. For Wal-Mart market ratio, the earnings per share are calculated by dividing net income by the number of shares outstanding. The price earnings are calculated by dividing the current market price per share of the stocks by earning per share. Upon calculating the market value for Wal-Mart, the price earnings ratio suggests the dollar amount investors anticipate to invest in Wal-Mart in order to receive one dollar of the company earnings between 2013 through 2015. The calculation also indicates Wal-Mart price per earning ratio increases from 2013 to 2015.Reference:Eakins, S., McNally, W. (01/2013). Corporate Finance Online, 1st Edition. [VitalSource Bookshelf Online]. Retrieved from https://kaplan.vitalsource.com/#/books/9781269887199/
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