Analyzing Fortune 100 Companies Paper

Q1.?Review the 14 financial ratios and make some conclusions or judgments about the values, trends, or comparisons with the other companies. For example, if one company has a significantly higher debt-to-equity ratio than the other two, what might be driving this.
Q2.?Has the company you are analyzing seen any major changes in its ratios in the past three years? Which of the three companies is most liquid in the most current year?
Q3.?How has your company managed short-term liabilities over the last three years?
Q4.?Analyze liquidity, profitability, financing (leverage), and activity for your company. Where is it strong?
Q5.?Consider the DuPont framework to interpret the results and make sure you make a judgment about your companys financial position based upon the data.
Liquidity Ratios
Liquidity
ratios
indicate Walmart Inc.’s ability to pay its short-term debts.
Trend
2016
Walmart Inc.
2017 2018
0.86
0.76
$
$
Current ratio
Current assets
Current liabilities
59,664
78,521
Comp.
Market Comparison
HD LOW Avg
1.11
0.97
WMT
0.76
0.93
1.06
Trend
2016
2017
2018
$
Quick ratio (aka Acid-test ratio)
Cash + accounts receivable
Current liabilities
HD
LOW
12,370
78,521
Comp.
WMT
0.16
Avg
0.15
0.22
0.19
0.16
$
0.22
0.06
Financing Ratios
Financing ratios indicate Walmart Inc.’s ability to pay its long-term debts and shows financial leverage.
Walmart Inc.
2017 2018
Trend
2016
$
Debt to equity
Total liabilities
Shareholders’ equity
123,700
80,822
WMT
Market Comparison
HD LOW Comp.
-24.43
5.01
1.39
1.47
1.53
$
1.53
Trend
2016
$
HD
LOW
Times interest earned
NI + Interest expense + Income taxes
Interest expense
2017
9.66
2018
3.77
Comp.
20,589
5,466
WMT
3.77
9.49
$
14.85
Activity Ratios
Activity ratios evaluate Walmart Inc.’s effectiveness in managing assets.
Asset turnover
Market Comparison
HD LOW
Trend
Walmart Inc.
2017 2018
2.44
2.48
2016
$
500,343
Net sales
WMT
Comp.
2.37
$
201,674
Average total assets
2.48
1.60
-0.02
Receivable turnover
Trend
2017
2018
$
Net sales
HD
LOW
Comp.
2016
77.18
500,343
5,725
WMT
87.40
84.80
87.40
$
Average accounts receivable (net)
36.54
Average collection period
Trend
2016
2017
2018
365
365
WMT
HD
LOW
Comp.
5
4
4
87.40
Receivables turnover
4
10
Trend
2016
2017
2018
$
Inventory turnover
Cost of goods sold
Average inventory
WMT
HD
373,396
43,415
Comp.
LOW
4.23
8.06
8.26
8.60
$
8.60
5.33
Average days in inventory
Trend
2016
2017
2018
365
365
HD
LOW
Comp.
WMT
42.44
45
44
42
8.60
Inventory turnover
68.52
86.34
Profitability Ratios
Profitability ratios evaluate various aspects of Walmart Inc.’s profit-making activities.
Trend
Walmart Inc.
2017 2018
0.03
0.02
$
10,523
2016
0.03
Profit margin on sales
Net income
Net sales
Comp.
WMT
0.02
Market Comparison
HD LOW
0.16
-5.45
$
500,343
Return on assets (ROA)
Trend
2016
2017
$
Net income
HD
LOW
Comp.
2018
1.30%
10,523
201,674
WMT
1.30%
1.87%
1.79%
$
Average total assets
6.28%
2.47%
Trend
2016
2017
$
2018
6.98%
Comp.
Return on assets (+interest)
NI + Interest expense x (1 – tax rate)
Average total assets
14,076
201,674
WMT
6.98%
HD
27.50%
LOW
9.89%
8.75%
8.36%
$
Trend
2016
2017
2018
$
10,523
Return on equity (ROE)
Net income
Average shareholders’ equity
WMT
HD
LOW
Comp.
4.45%
4.35%
3.26%
$
80,679
3.26%
-1311.44%
14.00%
Trend
2016
2018
$
WMT
Equity multiplier
Average total assets
Average total equity
HD
2017
2.43
Comp.
201,674
80,679
LOW
5.66
2.38
2.50
$
2.50
-208.80
Exploring Financial Ratios
WMT
2018
Main Company Ticker
Most Recent Year
Period
Round to
Comparable 1 Ticker
Comparable 2 Ticker
FY

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