About Wal-Mart
Ratio Analysis
In order to see if the company is a good investment or not it is important to investigate the company’s balance sheet, profit loss statement and cash flow statement. Another important way to measure a company’s financial strength is to look at financial ratios and compare the ratios to previous year, with the competitors or with industry average. It is also defined as the relationship among the various fields in the financial statements of the company i.e. among the items of balance sheet, income statement and cash flow statement. It will give comparative idea of the financial health of the company. Ratio in itself does not give you any information but it is used to compare it with either previous year or with some other company.
The financial ratio analysis includes following ratios
Profitability Ratios
Liquidity Ratios
Activity Ratios
Solvency Ratio
Market Ratio
Profitability Ratio:
Liquidity Ratio
Activity Ratio
Solvency Ratio
Market Ratios
Conclusion:
Based on the above Ratio analysis of financial statement of Wal-Mart for year 2008 and 2007, it can be concluded the company is earning more profit than last year. This is proven by the all profitability ratios in more favor in year 2008. However, the company has facing little bit more difficulties in managing cash, account payable and account receivables, which can be blamed to tough economic crises in year 2007. To conclude, Wal-Mart financial performance is good and has future potential for growth.
Assumptions:
The Total Revenue is in terms of present prices and To forecast the Total revenue for next 5 years with time.
Assume the selling price is assumed to £42 per unit (assumed) and growth rate of 5% is (given )
The total sales volume in year 1 is 100,000 units (assumed) and growth rate is 10% (assumed)
Thus, the total Revenue = Selling Price * Total Sales Volume...