-Calculate several ratios—I would suggest at least one from each of the categori

Question

-Calculate several ratios—I would suggest at least one from each of the categories (profitability, liquidity, solvency, and activity/efficiency) from chapter 4 (chapter 11 in Marshall) in the text plus at least one ratio that you have found somewhere else or even made up.  

-Examine the numerator and denominator of your primary ratio.

-Examine your primary ratio more thoroughly

Consolidated Statements of Income - USD ($)
shares in Millions, $ in Millions

Consolidated Balance Sheets - USD ($)
$ in Millions

Consolidated Statements of Income - USD ($)
shares in Millions, $ in Millions

12 Months Ended Jan. 31, 2018 Jan. 31, 2017 Jan. 31, 2016 Revenues: Net sales $ 495,761 $ 481,317 $ 478,614 Membership and other income 4,582 4,556 3,516 Total revenues 500,343 485,873 482,130 Costs and expenses: Cost of sales 373,396 361,256 360,984 Operating, selling, general and administrative expenses 106,510 101,853 97,041 Operating income 20,437 22,764 24,105 Interest: Debt 1,978 2,044 2,027 Capital lease and financing obligations 352 323 521 Interest income (152) (100) (81) Interest, net 2,178 2,267 2,467 Gain (loss) on extinguishment of debt 3,136 0 0 Income before income taxes 15,123 20,497 21,638 Provision for income taxes 4,600 6,204 6,558 Consolidated net income 10,523 14,293 15,080 Consolidated net income attributable to noncontrolling interest (661) (650) (386) Consolidated net income attributable to Walmart $ 9,862 $ 13,643 $ 14,694 Net income per common share: Basic net income per common share attributable to Walmart $ 3.29 $ 4.40 $ 4.58 Diluted net income per common share attributable to Walmart $ 3.28 $ 4.38 $ 4.57 Weighted-average common shares outstanding: Basic 2,995 3,101 3,207 Diluted 3,010 3,112 3,217 Dividends declared per common share $ 2.04 $ 2.00 $ 1.96

Explanation / Answer

There are various financial ratios that can be deduced from the question

-under profitability we have Return on Assets

= Net Income/Assets *100

= 10523/204522 * 100

= 5.15%

-under liquidity we have Working Capital

=Current Assets - Current Liabilities

=59664-78,521

=$(18857)

-Under Solvency we have Debt-Equity Ratio

= Debt Funds / Equity Funds

=(30045+6780)/80822

=0.45 times

- Under efficiency ratios we have Net Sales/ cash Ratio=

=Net Sales/ Cash

=495761/6756

=73.38 times

From among there options we can consider our Primary Ratio as Debt Equity Ratio.

The Neumerator of our Ratio is total of all Funds raised as borrowings from outsiders (banks, debenture holders) and denominator comprises of our capital from shareholders (equity as well preference)

Debt to equity ratio is a solvency ratio that indicates the soundness of long-term financial position of a company. It shows the relation between the portion of assets financed by creditors and the portion of assets financed by stockholders. As the debt to equity ratio expresses the relationship between external equity (liabilities) and internal equity (stockholder’s equity), it is also known as “external-internal equity ratio”.

If you find this useful, please click on thumbs up.

Related Questions

Navigate

• Browse (All)
• Browse #
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.