Sears V.S Walmart

941 words 4 pages
1. What ratios are MOST important in assessing current and predicting future value creation for Sears? For Wal-Mart?
Sears
Sears grew up to the world’s largest retailer by expanding annual sales through diversifying sale products, such as apparel, cosmetics, jewelry, electronics, household appliances, cookware, bedding and hand-tools. This article shows that Sears suffered from a cost increase in 1997, including lawsuits, credit collectibles and sales in Mexico. Besides, the flexible payment facility that Sears offered is also a reason for cost increase. These problems brought Sears with bad debt and hence decreased the cash flow. The problems of the company came from the liquid market security, so I emphasize the flowing concepts:
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We must see the business strategy and where they spent the money, which is the key of the company for the long term.

2 I personal calculate the working capital of the 2000 and 2001

| Working capital ($M)2000 | Working Capital 2001 | March | 704 | 205 | Jun | 559 | 87 | Sep | 504 | (21) | Dec | 386 | (38) |

His analysis was based on the working capital is shirking. The Working Capital table shows a decreasing trend since 2000. I don’t think amazon can still cover the cash flow in 2011 and use its capital efficiently. However, we cannot only use assumption of Working Capital to analysis a company, we need to look at the strategy, inventory, and so on. As this point, we will know Suria’s analysis is not proper. 3 Suria calculated the inventory as the stable mumble and use the revenue instead of Cost Goods Sold. But the revenue record as the market value, not as cost goods sold can indict the cost for the inventory. Amazon’s revenue varies season by season. We can use COG / average of the inventory to include the seasonal factor, instead of revenue/ inventory.

4 As for the inventory, I think, Suris is misleading by another point. He only thinks the inventory turnover is very low. However, amazon increases its inventory at the beginning year (from the case, the company only have 4000 books, but later on it run CDs, video, and movie. That’s why amazon has a very low

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