Financial Ratio Analysis

Walmart Stores
Fiscal year ending January 31.
Ratios
Current Ratio Quick Ratio

Formula
Current Asset / Current Liability (Current Asset Inventories) /Current Liability

2002

2003

Remarks

Accounts Receivables / Average Average Daily Collection Period Credit Sales Inventory Turnover Fixed Asset Turnover Total Asset Turnover Debt Ratio Debt to Equity Debt to Total Assets Times Interest Earned Gross Profit Margin Operating Profit Margin Return on Asset Sales / Average Inventory Sales / Net Fixed Assets Sales / Total Assets Total Liabilities / Total Assets Total Debt / Common Equity Total Debt / Total Assets Operating Income (EBIT) / Interest Expense Gross Profit / Sales Operating Income (EBIT) / Sales Net Income / Total Assets

Net Income / Return on Equity Common Equity Market Price Per Share / Earnings Per Share

Price Earnings Per Share

Wal-Mart was more able to cover its short-term obligations in 2002 than in 28,246/27,282 = 1.04 30,875/34,463 = 0.895 2003. (28,246 Wal-Mart is unable to cover short22,614)/27,282 = (30,875 - 24,891)/34,463 term debt obligations without selling 0.21 = 0.174 off inventory. This ratio indicates that Wal-Mart's accounts are being collected very quickly. The lower the ratio the more 2,000/(219,812/365) = 2,109/(246,525/365) = effective the firms collection of 3.32 3.12 accounts. Inventory was replaced ten (10) times 219,812/ 246,525/ during each year. Walmart is very (22,614+21,442)/2 = (24,891+22,614)/2 = effective in the management of its 9.98 10.38 inventories. The Company was very efficient in using fixed assets to generate sales. The higher the figure the more sales 219,812/45,750 = 4.8 246,525/48,700 = 5.06 is earned on the fixed assets used. The Company was very efficient in using total assets to generate sales. The higher the figure the more sales 219,812/83,451 = 2.63 246,525/94,552 = 2.61 is earned on the total assets used. 58% of the firm's debt was supplied by non-owners and 42% supplied by 48,349/83,451 = .58 55,284/94,552 = .58 owners. Ratio shows Wal-Mart has 1.4 times 48,349/35,102 = 1.38 55,284/39,268 = 1.41 more debt than equity. 58% of the firm's debt was financed by non-owners and 42% financed by 48,349/83,451 = .58 55,284/94,552 = .58 owners. Wal-Mart had had ample operating income to cover its interest expense 12,077/1,326 = 9.11 13,644/1,063 = 12.84 for both years. Cost of goods sold accounts for 78% of total sales. Only 22% remained for 48,250/219,812 = .22 54,687/246,525 = .22 use for other purposes. 5 1/2% of Wal-Marts sales revenues remained after subtracting all 12,077/219,812 = 0.055 13,644/246,525 = 0.055 operating expenses. Wal-Mart's total assets produced, on average, income of $0.085 for each 6,671/83,451 = 0.08 8,039/94,552 = .085 dollar invested. For both years, Wal-Mart returned approx. $0.20 for every dollar 6,671/35,102 = 0.19 8,039/39,268 = 0.21 stockholders invested in the firm. The P/E ratio was lower in 2003 than in 2002. The higher the ratio the more confidence investors are displaying about the firms future 59.83/1.5 = 39.89 53.13/1.81 = 29.35 growth.

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