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This also justifies the large value of inventory previously pointed out when the current ratio was calculated.
The debt to assets ratio will show the leverage of the company and evaluate the financial risk at Wal-Mart. In 2007, the debt to assets ratio at Wal-Mart was 0.216. The financial leverage used by the company is quite small, but the explanation for this resides not necessarily in the small value of debt (as we have seen previously, the company does use this as an important method of financing its activities), but in the very high value of the assets, part of these being financed by shareholders' equity. Things like markets and buildings are worth the largest part of the total assets (property is listed at $109,798 million in 2007).
The times interest earned ratio shows the company's ability to meet all its assumed debt obligations. In our case, in 2007 Wal-Mart's times interest ratio was 13.198. This shows a solid approach to financial issues, the company being able to cover its interest obligations...
The slight decrease is caused by the increase of inventory value at a faster pace than the net cost of sales. The inventory turnover was 9.94 in 2007, compared to 9.68 in 2006. The latter ratio showed a slight increase mainly due to an increase in the inventory value over this period of time.
Financial Performance ratios
The price earnings ratio was 18.57 in 2007 at Wal-Mart, the same as the industry average. At the same time, it was a bit higher than Target's, but lower than at Costco Wholesale Corporation.
In my opinion, all the changes were induced by the company's further development, which triggered new investments in its inventories, as well as in increasing its total assets value. Some of these have affected some of the financial ratios, but the company has managed to keep a balanced…
Financial Performance ratios
The price earnings ratio was 18.57 in 2007 at Wal-Mart, the same as the industry average. At the same time, it was a bit higher than Target's, but lower than at Costco Wholesale Corporation.
In my opinion, all the changes were induced by the company's further development, which triggered new investments in its inventories, as well as in increasing its total assets value. Some of these have affected some of the financial ratios, but the company has managed to keep a balanced and solid financial policy, not overextending its leverage. At the same time, in many of the financial ratios, Wal-Mart has been outperforming the general industry averages in the retail business.
54 0.54 Asset Turnover 0.35 0.28 Net Assets / Total Assets 0.34 0.34 For these calculations, it is assumed that net assets is defined as total nets, net of liabilities (aka shareholder's equity). The asset management at this firm has changed little over the course of the past year. The only ratio in which a change is noted is the asset turnover, and that is more related to the fact that operating revenue saw an increase of 27.7%
b) The previously analyzed case shows the potential limitations of ratio analysis in the fact that this type of analysis only shows a particular moment in the company's business development process. For example, the significant decrease in the interest coverage ratio may in fact hide the fact that the company has taken an extra loan to improve its equipment and that this new equipment is expected to generate higher earnings
In Liz Clairborne's case, Debt Ratio = Total Debt/Total asset value = 78%. In Kenneth Cole's case, Debt Ratio = Total Debt/Total Asset = 77% As we can see, the debt ratio value is similar in the two companies and shows a reasonable financing of the business with outside financial sources. The Times Interest Earned value (TIE) shows how much income can decrease in the company without financial problems appearing, as an incapacity to pay
Ratio Analysis: Midwest Health Plan Inc. Financial ratios are critical for decision making purposes. Some of those who utilize information derived from the analysis of financial statements include but they are not limited to lenders, managers, the government and stockholders. In this text, I amongst other things compute two financial ratios from Midwest Health Plan, Inc. In an attempt to determine the financial health of the organization. Midwest Health Plan, Inc. Ratio
Anheuser, on the other hand, had larger spread operations and could simply use its stance on the market to cover short-term liabilities. In terms of financial leverage, the charts indicate a ratio of 4.7 for Anheuser Busch and a ratio of 1.4 for Boston Beer. The numbers show a high risk in case of Anheuser Busch (surpassing more than twice the industry mean of 2) and a very stable Boston
Ratio Analysis The Balance Sheet and the Statement of Income are essential, but they are only the starting point for successful financial management. Apply Ratio Analysis to Financial Statements to analyze the success, failure, and progress of your business. Ratio Analysis enables the business owner/manager to spot trends in a business and to compare its performance and condition with the average performance of similar businesses in the same industry. To do this