Hello, Please assist me with the following study for my exam.
Evaluate each firm's financial performance for the two most recent years available by (1) performing financial ratio analysis using the Microsoft® Excel® Ratio Analysis Worksheet, (2) performing trend analysis on those financial ratios.
Your analysis should include at least eight from the following list:
1) Current ratio
2) Quick ratio
3) Average collection period (days sales outstanding)
4) Inventory turnover ratio (if applicable)
5) Times interest earned
6) Debt-to-equity ratio
7) Net profit margin
8) Return on equity
9) Total asset turnover
10) Return on assets
11) Price-earnings ratio
For both of these years and companies:
Identify the amount of cash generated or used from each of operating, investing, and financing activities.
Use the companies' website or http://moneycentral.msn.com/investor/research.asp?Symbol
Select two companies that trade on the New York Stock Exchange and are competitors in a similar field. Using the public financial information available to discuss, describe, and explain the direction the firm is planning to go in the marketplace. In your evaluation, be sure to discuss if you feel this is the right direction for each of the firms to take.
Then using financial ratios of your choice and other published information compare and discuss the following information for the two firms:
Liquidity and adequate profits on the assets of the company.
How is the company financing its assets? With debt finance or equity financing? Is this the best way to the finance the debt, in your mind? If they have no debt, do you see them as a cash rich take-over target? Compare the overall financials strengths of each company.
Are the firm's managers providing a good return on the capital provided by the company's shareholders?
Evaluate the strategic plan you for each company for the next three years.
I have selected Wal-Mart and Target as companies
Wal-Mart Stores, Inc. (Wal-Mart) operates retail stores in various formats worldwide. The Company organizes its business into three principal segments: Wal-Mart Stores, SAM'S CLUB and International. The Wal-Mart Stores segment is the largest segment of Wal-Mart's business, accounting for 67.3% sales during the fiscal year ended January 31, 2005 (fiscal 2005). The segment consists of three different retail formats, all of which operate in the United States. The Company's SAM'S CLUB segment consists of membership warehouse clubs that operate in the United States, and accounts for 13% of fiscal 2005 sales. The international segment consists of retail operations in eight countries and Puerto Rico, and generated 19.7% of Wal-Mart's fiscal 2005 sales. In addition, the Company owns an unconsolidated minority interest of approximately 37% of The Seiyu, Ltd., a retailer in Japan.
Target Corporation was founded in Minnesota in 1902. It is the sixth largest retailer in the United States and is ranked 27th on the 2005 Fortune 500. Target is performing very well in the market place though its stock's performance is subdued. The company operates over 1,450 stores in 47 states in USA.
Strategic Plan of Wal-Mart
Wal-Mart operates discount retail department stores selling a broad range of products. It typically stocks basic, rather than premium products. Wal-Mart also operates "Supercenters" which include a full line of grocery items. Wal-Mart also operates Sam's Club; these are "warehouse clubs" which, like Costco, require membership dues and sell merchandise in large and inexpensive sizes and quantities.
Wal-Mart operates 5 major retail formats under 3 retail divisions:
* Wal-Mart Stores USA
o Wal-Mart Discount Stores ? Average 100,000 square feet (9,290 m²) and include a selection of general merchandise, including apparel, electronics, health and beauty aids, toys, sporting goods, and household products.
o Wal-Mart Supercenter ? Average 187,000 square feet (17,400 m²) and combine a standard Wal-Mart Discount Store with a full-line supermarket. (commonly known as big box stores)
o Wal-Mart Neighborhood Market ? Average 43,000 square feet (4,000 m²) and include grocery, pharmacy, and limited general merchandise products.
o Walmart.com ? Online shopping site that offers merchandise different from that in stores. The walmart.com site also offers digital music downloads with digital rights management (DRM) and online photo processing.
* SAM'S CLUB ? a membership-only wholesale warehouse club focused mainly on serving small business owners. Clubs average 128,000 square feet (11,891 m²).
* Wal-Mart International ? operates various formats internationally, including (but not limited to) SAM'S CLUB, Discount Stores, Supercenters, Supermarkets, and restaurants.
Differentiation from competitors
Thus the single most important differentiation aspect of Wal-Mart is that they create the ideal one-stop shopping experience by providing goods and services at value for money prices. Wal-Mart is organized into ten distinct divisions. These include: Wal-Mart stores, SAM'S CLUBS, Neighborhood Markets, International, walmart.com, Tire & Lube Express, Wal-Mart Optical, Wal-Mart Pharmacy, Wal-Mart Vacations, and ...
This explains the steps for Ratio Analysis for Walmart and Target