The chapter stresses the importance of comparing an individual company's fi-nancial ratios to industry norms. Robert Morris Associates (RMA), a national associationof bank loan and credit officers, publishes industry-specific financial data in its AnnualStatement Studies. This publication includes vertical analysis financial statements andvarious ratios classified by four-digit SIC code. [Note: An alternative source is Dun \&Bradstreet's Industry Norms and Key Business Ratios.]Obtain the 1996 edition of Annual Statement Studies (covering fiscal years endedApril 1, 1995, through March 31, 1996) and the 1996 or 1997 annual report of Wal-MartStores, Inc.Instructions

(a) Prepare a 1996 vertical analysis balance sheet and income statement for Wal-Mart.

(b) Calculate those 1996 ratios for Wal-Mart that are covered by RMA. [Note: The spe-cific ratio definitions used by RMA are described in the beginning of the book. Useending values for balance sheet items.]

(c) What is Wal-Mart's SIC code? Use your answers from parts

(a) and

(b) to compareWal-Mart to the appropriate current industry data. How does Wal-Mart compare to its competitors? [Note: RMA sorts current-year data by firm assets and sales, while5 years of historical data are presented on an aggregate basis.]

(d) How many sets of financial statements did RMA use in compiling the current in-dustry data sorted by sales?