Question
Compare the performance of these 3 companies mentioned and analyze which company is in better financial standing in terms of Profitability, Liquidity, Efficiency, and leverage,
Compare the performance of these 3 companies mentioned and analyze which company is in better financial standing in terms of Profitability, Liquidity, Efficiency, and leverage, Market value and provide your recommendations on what can they improve on to have a better financial standing.
The question is related to financial management
Here is the required Data
Walmart
The market Capitalization was 337.17 Billion at the end of 2019
Microsoft
Liquidity | |
Year | Current Ratio |
2019 | 2.53 |
2018 | 2.9 |
2017 | 2.92 |
Year | Quick Ratio |
2019 | 2.35 |
2018 | 2.74 |
2017 | 2.37 |
Year | Cash Ratio |
2019 | 1.93 |
2018 | 2.29 |
2017 | 2.06 |
Dupont Analysis | |
2019 | |
ROE | 0.383 |
Profitable | 2.154 |
Efficiency | 0.063 |
Leverage | 2.8 |
2018 | |
ROE | 0.2 |
Profitability | 0.94 |
Efficiency | 0.057 |
Leverage | 3.129 |
2017 | |
ROE | 0.29 |
Profitable | 1.648 |
Efficiency | 0.061 |
leverage | 2.85 |
Market capitalization was 1.2 Trillion at the end of 2019
DowDupont
Liquidity | |
Year | Current Ratio |
2019 | 2.3 |
2018 | 2.01 |
2017 | 1.91 |
Year | Quick ratio |
2019 | 2.21 |
2018 | 1.94 |
2017 | 1.86 |
Dupont analysis | |
2019 | |
ROE | (-) 0.030 |
Profitability | 0.13% |
Efficiency | 0.36 |
Leverage | 0.38 |
2018 | |
ROE | 0.041 |
Profitability | 0.12% |
Efficiency | 0.26 |
Leverage | 0.23 |
2017 | |
ROE | 0.016 |
Profitability | 0.16% |
Efficiency | 0.33 |
Leverage | 0.13 |
The market capitalization was 151.1 billion at the end of 2018
Formula 2019 2018 2017 0.86 Liquidity Ratios Current ratio Quick ratio Cash ratio Current assets / Current liability (Current assets - inventory) / Current liability Cash & equivalent / Current liability 0.8 0.23 0.1 0.76 0.2 0.09 0.22 0.1 11.27 Efficiency ratios Inventory turnover Receivable turnover Payable turnover Total asset turnover 83.14 Sales / inventory Sales / receivable COGS / payables Sales / total assets 11.62 81.87 8.19 2.35 11.42 89.05 8.1 2.44 8.72 2.44 - Leverage ratio Debt ratio Total liabilities/Total assets Equity multiplier ratio Total assets / Common equity Times interest earned EBIT/ Interest 0.64 3.02 9.67 0.6 2.63 9.1 0.59 2.56 9.14 Profitability ratios Profit margin ROA ROE Net income / Sales Net income / Total assets Net income / Common equity 1.30% 3.04% 9.20% 1.97% 4.82% 12.66% 2.81% 6.86% 17.54% 2019 9.23% 2018 12.64% 2017 17.55% DuPont Equation ROE = Net Margin x Asset turnover ratio x Equity multiplier Working Formula 2019 2018 2017 Liquidity Ratios Current ratio Quick ratio Cash ratio Current assets / Current liability (Current assets - inventory) / Current liability Cash & equivalent / Current liability 0.799 0.228 0.100 0.760 0.202 0.086 0.862 0.219 0.103 Efficiency ratios Inventory turnover Receivable turnover Payable turnover Total asset turnover Sales / inventory Sales / receivable COGS/ payables Sales / total assets 11.620 81.873 8.187 2.346 11.418 89.047 8.101 2.444 11.270 83.144 8.719 2.440 0.595 Leverage ratio Debt ratio Equity multiplier ratio Times interest earned Total liabilities/ Total assets Total assets / Common equity EBIT / Interest 0.637 3.025 9.669 0.605 2.626 9.096 2.556 9.143 2019 2018 2017 0.013 Profit margin ROA ROE Profitability ratios Net income / Sales Net income / Total assets Net income / Common equity 0.030 0.092 0.020 0.048 0.127 0.028 0.069 0.175 DuPont Equation ROE = Net Margin x Asset turnover ratio x Equity multiplier 0.092 0.126 0.176 Formula 2019 2018 2017 0.86 Liquidity Ratios Current ratio Quick ratio Cash ratio Current assets / Current liability (Current assets - inventory) / Current liability Cash & equivalent / Current liability 0.8 0.23 0.1 0.76 0.2 0.09 0.22 0.1 11.27 Efficiency ratios Inventory turnover Receivable turnover Payable turnover Total asset turnover 83.14 Sales / inventory Sales / receivable COGS / payables Sales / total assets 11.62 81.87 8.19 2.35 11.42 89.05 8.1 2.44 8.72 2.44 - Leverage ratio Debt ratio Total liabilities/Total assets Equity multiplier ratio Total assets / Common equity Times interest earned EBIT/ Interest 0.64 3.02 9.67 0.6 2.63 9.1 0.59 2.56 9.14 Profitability ratios Profit margin ROA ROE Net income / Sales Net income / Total assets Net income / Common equity 1.30% 3.04% 9.20% 1.97% 4.82% 12.66% 2.81% 6.86% 17.54% 2019 9.23% 2018 12.64% 2017 17.55% DuPont Equation ROE = Net Margin x Asset turnover ratio x Equity multiplier Working Formula 2019 2018 2017 Liquidity Ratios Current ratio Quick ratio Cash ratio Current assets / Current liability (Current assets - inventory) / Current liability Cash & equivalent / Current liability 0.799 0.228 0.100 0.760 0.202 0.086 0.862 0.219 0.103 Efficiency ratios Inventory turnover Receivable turnover Payable turnover Total asset turnover Sales / inventory Sales / receivable COGS/ payables Sales / total assets 11.620 81.873 8.187 2.346 11.418 89.047 8.101 2.444 11.270 83.144 8.719 2.440 0.595 Leverage ratio Debt ratio Equity multiplier ratio Times interest earned Total liabilities/ Total assets Total assets / Common equity EBIT / Interest 0.637 3.025 9.669 0.605 2.626 9.096 2.556 9.143 2019 2018 2017 0.013 Profit margin ROA ROE Profitability ratios Net income / Sales Net income / Total assets Net income / Common equity 0.030 0.092 0.020 0.048 0.127 0.028 0.069 0.175 DuPont Equation ROE = Net Margin x Asset turnover ratio x Equity multiplier 0.092 0.126 0.176Step by Step Solution
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