Wal-Mart Financial Analysis - Fin515

2036 words 9 pages
Wal-Mart Financial Analysis
Danny J. Saldana
FIN515
August 27, 2012 Professor David Felsberg

I have chosen Wal-Mart as my company to do a financial analysis on. In my financial analysis I will look will be reviewing Wal-Marts financial ratios for years 2010 and 2005. I will also be looking at Target’s financial ratios for the same years to determine how Wal-Mart is doing within its industry.

(All numbers are in thousands)
Liquidity ratios

Current ratio - Measures whether or not a firm has enough resources to pay its debts over in the short-term.
Current ratio = Current assets / Current liabilities

2010:
Wal-Mart - $51,893,000 / $58,484,000 = .89
Target - $17,213,000 / $10,070,000 = 1.71
Surprisingly, at least to
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It compares the earnings of the company, including interest and taxes, to the company’s assets.
Basic Earning Power = Earnings before interest and taxes / Total assets

2010:
Wal-Mart = $25,743,000 / $180,663,000 = 14.25%
Target = $5,325,000 / $43,705,000 = 12.18%

2005:
Wal-Mart = $17,487,000 / $138,187,000 = 12.65%
Target = $5,069,000 / $34,995,000 = 14.48%

Leverage ratios

Debt / Net worth – This ratio is used to measure much debt is used to finance the business. Depending on too much debt financing can increase risk.
Debt / Net worth = Debt / Equity

2010:
Wal-Mart = $112,121,000 / $68,542,000 = 163.6%
Target = $28,218,000 / $15,487,000 = 182.2%

2005:
Wal-Mart = $85,016,000 / $53,171,000 = 159.89%
Target = $20,790,000 / $14,205,000 = 146.36%

Debt Ratio – A ratio that measures the amount of financial leverage a company has.
Debt ratio = Debt / Total assets

2010:
Wal-Mart = $112,121,000 / $180,663,000 = 62.06%
Target = $28,218,000 / $43,705,000 = 64.56%

2005:
Wal-Mart = $85,016,000 / $138,187,000 = 61.52%
Target = $20,790,000 / $34,995,000 =

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