Goal 2

Ratio Analysis

January 30, 2016 January 31, 2015 Total current assets Merchandise inventories Property and equipment, net of depreciation Total assets Total current liabilities Total long-term liabilities Total liabilities Total shareholders' equity $ 14,130 8,601 25,217 40,262 12,622 14,683 27,305 12,957 $ 13,624 8,282 25,952 41,172 11,736 15,439 27,175 13,997 73,785 51,997 21,788 5,530 72,618 51,278 21,340 4,535 Revenue Cost of goods sold Gross profit Operating income Earnings from continuing operations Before income tax expenses Income tax expense Net (loss)/earnings Basic earnings per share 4,923 1,602 3,363 $5.35 3,653 1,204 (1,636) $ 2.58) WALMART STORES, INC. Selected Financial Information (Amounts in millions except per share data) January, 31 2016 January 31, 2015 Total current assets Merchandise inventories Property and equipment, net of depreciation Total assets Total current liabilities Total long-term liabilities Total liabilities Total shareholders' equity $ 60,239 44,469 110,171 199,581 64,619 51,351 115,970 83,611 $ 63,278 45,141 114,280 203,490 65,253 52,300 117,553 85,937 $ 482,130 360,984 121,146 24,105 $ 485,651 365,086 120,565 27,147 Revenue Cost of goods sold Gross profit Operating income Earnings from continuing operations Before income taxes Income tax expense Net earnings Basic earnings per share 21,638 6,558 14,694 $ 4.58 24,799 7,985 16,363 $5.07 Analyzing Target Corporation and Walmart Stores, Inc. Part 1: Computing Ratios Using the selected financial information for Target Corporation and Walmart Stores, Inc complete the following ratios for the companies' 2016 fiscal year. (FY ended Jan 30, 2016 and Jan 31, 2016 respectively) Remember to show your work and properly express the ratios in your final answer. All amounts are to be carried to the nearest HUNDREDTH or hundredth of a percent. (1) Current ratio. (2) Average days to sell inventory. (Use average inventory.) (3) Debt to assets ratio. (4) Return on investment. (Use average assets and use "earnings from continuing operations" rather than "net earnings.") (5) Gross margin percentage. (6) Asset turnover. (Use average assets.) (7) Return on sales. (Use "earnings from continuing operations" rather than "net earnings.") (8) Plant assets to long-term debt ratio. Part 2: Written Analysis of the Data Half of the points on this assignment are allocated to the analysis. Writing should have no major errors in usage, grammar, spelling, punctuation, or capitalization. Explanations should include the ratios used with data and language to support your conclusion. Evaluation method: 1. Highest evaluation provides overwhelming support. (4 to 5 sentence explanation to reach conclusion) 2. Proficient evaluation provides general support. (3 sentences used to explain your answer) 3. Developing evaluation is insufficient support. (less than 2 sentences) A. Which company appears to be more profitable? Explain your answer and identify which of the ratio(s) from Part 1 you used to reach your conclusion. B. Which company appears to have the higher level of financial risk? Explain your answer and identify which of the ratio(s) from Part 1 you used to reach your conclusion. C. Which company appears to be charging higher prices for its goods? Explain your answer and identify which of the ratio(s) from Part 1 you used to reach your conclusion. D. Which company appears to be the more efficient at using its assets? Explain your answer and identify which of the ratio(s) from Part 1 you used to reach your conclusion