Financial Statement Analysis
In the following paper we descried Wal-Mart is Fortune 500 Company with presence in Puerto Rico, we defined accounting ratio and compares two aspects of a financial statement, such as the relationship of current assets to current liabilities. According, Stock Analysis on Net (2013), these different formulas:
*Current Ratio: Current assets/Current liabilities
* Inventory Turnover: Cost of Goods Sold/Average Inventory
*Profit Margin on Sales: Net Income/Net Sales
*Debt to Assets Ratio: Total Liabilities/Total Assets
*Book Value per Share: Common Stockholders’ Equity/Outstanding Shares
The ratios can be used to evaluate the financial situation of a company and shows the company's strengths and weaknesses, also help to compare with other organizations. The following ratios for 2013 calculated for Wal-Mart: quick and current liquidity ratio are .2606 and .8837, DuPont ratio is .83 or 83% , profit margin is .333, asset utilization is .1403, and financial leverage is .5968,( Ivesting.com., 2013).
Accounting according to Horngren at el. (2008) is based on a set of principles on which there is a general agreement of conventions, rules, and procedures that together make up accepted accounting practice at any given time called generally accepted principles (GAAP).
The Financial Accounting Standards Board (FASB) sets GAAP in the United States, and International Accounting Standards Board (IASB) establishes the international standards. Both organizations aim at establishing some guidelines for the preparation and interpretation of financial statements. Also, both ensure the reliability of the information because it should be accurate, and guarantee data integrity. The elements contained in the financial statements present fairly the transactions that have occurred in the companies. Both search for uniformity in accounting, they has a great impact on the information and the submissions of financial statements because they help...