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Solvency of the company(walmart)

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What is the Solvency of the company(walmart) as measured by the below listed ratios? How has it changed over the last five years? How does it compare to its industry or its competitors?

Liquidity Ratios

Current Assets
Current Ratio = ---------------------------
Current Liabilities

Cash + Marketable Securities + Accounts Receivable
Quick Ratio =
------------------------------------------------------------------------
--------
Current Liabilities

Cash + Marketable Securities
Cash Ratio = ---------------------------------------------
Current Liabilities

Current Assets - Inventory
Acid Test Ratio = -----------------------------------------
Current Liabilities

Cash Flow from
Operations
Cash Flow from Operations Ratio =
-----------------------------------------
Current
Liabilities

Activity Ratios

Cost of Goods Sold
Inventory Turnover = ----------------------------------------
Average Inventory Balance

365 days
Average Inventory Period = -----------------------------
Inventory Turnover

Sales
Receivables Turnover =
---------------------------------------------------------
Average Accounts Receivable Balance

365 days
Average Collection Period = --------------------------------
Receivables Turnover

Solvency Ratios

Debt (exclude A/P & salaries)
Debt to Asset Ratio = ----------------------------------------------
Total Assets

Debt (exclude A/P & salaries)
Debt to Equity Ratio = ----------------------------------------------
Total Equity

Operating Income
Interest Coverage = ----------------------------
Financing Costs

Profitability Ratios

Gross Margin
Gross Margin Percentage = ------------------------ X 100%
Total Revenues

Operating Income
Operating Margin Percentage = --------------------------- X 100%
Total Revenues

Net Income
Net Income Percentage = --------------------------- X 100%
Total Revenues

Net Income
Earnings Per Share (EPS) = -------------------------------------------
Average Shares Outstanding

Market Price of Stock
Price Earnings Ratio = ----------------------------------
Earnings Per Share

Dividend
Dividend Payout = -----------------------------------
Market Price of Stock

Earnings After Tax - Preferred
Dividends
Return on Equity (ROE) =
---------------------------------------------------------------
Equity - Preferred
Stock

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Solution Preview

What is the Solvency of the company(walmart) as measured by the below listed ratios? How has it changed over the last five years? How does it compare to its industry or its competitors?

Liquidity Ratios

Current Assets
Current Ratio = ---------------------------
Current Liabilities

Cash + Marketable Securities + Accounts Receivable
Quick Ratio =
------------------------------------------------------------------------
--------
Current Liabilities

Cash + Marketable Securities
Cash Ratio = ---------------------------------------------
Current Liabilities

Current Assets - Inventory
Acid Test Ratio = -----------------------------------------
Current Liabilities

Cash ...

Solution Summary

This provides the steps to calculate the Solvency of the company(walmart)

$2.19
See Also This Related BrainMass Solution

Compute selected ratios,and compare liquidity, profitability, and solvency for 2 companies.

Selected financial data of target and walmart for 2001 are presented here in millions.
target walmart
------------------------------------
income statement data for year

net sales $39,176 $217,799
cost of goods sold $27,246 $171,562
selling&administrative- $9,962 $36,173
expenses
Interest expense $464 $1,326
other income expense $712 $2,013
income tax expense $842 $3,897
_______________________
net income $1,374 $6,854

Balance Sheet date(end of yr)

Current assets $9,648 $28,246
Non current assets $14,506 $55,205
__________________________
total assets $24,154 $83,451

Current liabilities $7,054 $27,282
long term debt $9,240 $21,067
total stockholders equity $7,860 $35,102
_________________________
total liabilities&stockholders $24,154 $83,451
equity

Beginning of the year balances

Total assets $19,490 $78,130
total stockholders equity $6,519 $31,343
current liabilities $6,301 $28,949
___________________________
total liabilities $12,971 $46,787

Other Data
average net $1,916 $1,884
receivables
Average inventory $4,349 $22,028
Net cash provided
by operating activities $1,992 $10,260

Instructions:
a. for each company, compute the following ratios.
1. current
2. receivables turnover
3.average collection period
4. inventory turnover
5. days in inventory
6. profit margin
7. asset turnover
8. return on assets
9. return on common stockholders equity
10. debt to total assets
11. times interest earned
b. compare the liquidity, solvency, and profitability of the two companies.

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