Instructions:

Within Walmart$$s Annual Report, locate its financial statements beginning on page $53.$

Within Amazon$$s Annual Report, locate its financial statements beginning on page $36.$

Download the Excel template and calculate the requested ratios for each company$$s most recent year$-$end only $($that is$,2022$ for Walmart and $2021$ for Amazon$).$ Please be careful to pick up the correct year as Amazon presents its results from oldest to most recent while Walmart presents its results from most recent to oldest.

$1.$ Current ratio

$2.$ Days$$ inventory outstanding $($DIO$)($hint: both companies use the wording $$Cost of sales$$ which is the same thing as $$Cost of goods sold$)$

$3.$ Days$$ sales outstanding $($DSO$)($hint: use $$total net sales$$ for Amazon and $$net sales$$ for Walmart for this calculation$)$

$4.$ Days$$ payable outstanding $($DPO$)$

$5.$ Debt ratio

$6.$ Operating income percentage

$7.$ Return on sales

$8.$ Return on total assets $($ROA$)($hint: Use $$consolidated net income$$ for Walmart and include interest expense relating to both $$debt$$ and $$finance$,$ capital lease and financing obligations$$ for Walmart$)$

$9.$ Return on equity $($ROE$)($hints: neither company has any preferred dividends. Use $$consolidated net income attributable to Walmart$$ in the numerator and $$total Walmart shareholders$$ equity$$ in the denominator when calculating this ratio$)$

$10.$ Price$/$Earnings Ratio $($P$/$E Ratio$)($hints: use a share price of $$3,372\mathrm{.}80$ for Amazon and $$139\mathrm{.}81$ for Walmart AND utilize the basic earnings per share information from each company$$s Consolidated Statements of Income$/$Operations$)$

Based on your analysis, answer the following questions $($answers should be recorded in this document$).$ Once complete, upload both this Word document and your Excel document into the Assignment $10-$D folder on Moodle.

Based on your Ratio Analysis:

Which company is in a better position to pay its current liabilities $($that is$,$ stronger liquidity$)?$ Explain how you know this.

Which company has a more favorable cash conversion cycle? Explain how you know this.

Which company has more debt in its overall capital structure $($that is$,$ more leveraged$)?$ Explain how you know this.

Which company earns a higher percentage of profit from each sales dollar in its core business operations $($that is$,$ from its operating income$)?$ Explain how you know this.

Which company is generating the most net income based on sales? Explain how you know this.

Which company is earning more based on each dollar of assets invested by both shareholders $($owners$)$ and creditors $($lenders$)?$ Explain how you know this.

Which company is earning more based on every $$1$ invested by its common shareholders? Explain how you know this.

Compare the basic earnings per share $($EPS$)$ of these two companies which is disclosed on their Consolidated Statements of Income$/$Operations for the past $3$ years.

Walmart Amazon

$2022\_\_\_\_\_\_\_\_\_\_$

$2021\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$2020\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$2019\_\_\_\_\_\_\_\_\_\_$

What does this ratio represent AND which company is currently outperforming the other?

Interpret each company$$s P$/$E ratio. That is$,$ explain what each company$$s P$/$E ratio tells us$.$

Based on your analysis and review of each company$$s financial statements, do you see any $$red flags$$ that cause you concern? $($suggestion: review p$.547/8$ of your textbook for a discussion of common signs of trouble or $$red flags$$ in financial statements$).$

Based on all of your analysis, identify the company you feel is the better investment and justify your position.

If you could ask Doug McMillon, the CEO of Walmart one question so that you can made a better informed investment decision, what would that question be$?$

If you could ask Andy Jassy, the CEO of Amazon one question so that you could make a better informed investment decision, what would that question be$?$

Identify at least one limitation with respect to the ratio analysis you performed on this assignment. $($suggestion: review p$.547$ of your textbook for a discussion of possible limitations$)$