I THUMBS UP AND LEAVE POSITIVE FEEDBACK ! PLEASE ANSWER THE 2 STUDY QUESTIONS FO

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Question

I THUMBS UP AND LEAVE POSITIVE FEEDBACK ! PLEASE ANSWER THE 2 STUDY QUESTIONS FOR THUMBS UP!

SUPPLY CHAIN MANAGEMENT

PLEASE ANSWER THE 2 STUDY QUESTIONS ABOVE

CASE STUDY Financial Statements for Walmart Stores Inc. and Macy's Inc. Table 3-8 contains the financial results for Walmart and Macy's for 2012. Evaluate the financial performance of each company based on the various metrics discussed in Section 3.1, such as ROE, ROA, profit margin, asset turns, APT, C2C, ART, INVT, and PPET. Can you explain the differences you see in their performance based on their supply chain strategy and structure? Com- pare the metrics for each company with similar metrics for Amazon and Nordstrom from Table 3-1. Which met- rics does each company perform better on? What supply chain drivers and metrics might explain this difference in performance? TABLE 3-8 Selected Financial Data for Walmart Stores Inc. and Macy's Inc Year ended January 31, 2013 (S millions) Net operating revenues Cost of goods sold Gross profit Selling, general, and administrative expense Other Costs Operating income Interest expense Other income(loss)-net Income before income taxes Income taxes Net income Assets Cash and cash equivalents Net receivables Inventory Prepaid expenses and other Total current assets Property, plant, and equipment Goodwill Other intangible assets Other assets Total assets Liabilities and Stockholder Equity Accounts payable Short-term debt Total current liability Long-term debt Other liabilities Total liabilities Stockholder equity Walmart 469,162 352,488 116,674 88,873 Macy's 27,931 16,725 11,206 8,440 27,801 2,251 187 25,737 7,981 17,756 2,678 388 134 2,290 804 1,486 1,836 371 5,308 7,781 6,768 43,803 1,588 59,940 116,681 20,497 7,876 8,196 3,743 5,987 203,105 615 20,991 59,099 12,719 71,818 41,417 4,951 124 5,075 6,806 3,059 14,940 6,051 121,367 81,738

Explanation / Answer

Return on Assets (ROA) = Net Income / Total Assets

Return on Equity (ROE) = Net income / Total Equity

Return on Financial Leverage = ROE – ROA

Profit Margin = Net Income / Revenue

Asset Turnover = Sales / Total Assets

Accounts Payables Turnover = Cost of Goods sold / Average payables

Accounts Receivables turnover = sales / average receivables

Inventory turnover = Cost of goods sold / average inventory

PPET = Revenue / property, plant, equipment

Cash to cash Cycle (C2C) = Days receivables + days inventory – days payables

Parameters

Walmart

Macy’s

Amazon.com

Nordstrom Inc.

ROA

17756 / 203105 = 0.087

1486 / 20991 = 0.71

274000/40159000 = 0.0068

735000/8089000 = 0.091

ROE

17756/81738 = 0.22

1486/6051 = 0.245

274000/9746000 = 0.028

735000/1913000 = 0.38

ROFL

0.133

-0.465

0.0212

0.289

Profit Margin

17756/469762 = 0.037

1486/27931 = 0.053

274000/74452000 = 0.0037

735000/12148000 = 0.061

Asset Turnover

469762/203105 = 2.31

27931/20991 = 1.33

74452000/40159000 = 1.85

12148000/8089000 = 1.5

Accounts Payables Turnover

352488/50099 = 7.03

16725/4951 = 3.38

54181000/21821000 = 2.48

7432000/1011000 = 7.35

Days Payables

365/7.03 = 51.9

365/3.38 = 107.98

365/2.48 = 147.17

365/7.35 = 49.65

Accounts Receivables Turnover

469762 / 6768 = 69.4

27931/371 = 75.28

74452000/4767000 = 15.61

12148000/2129000 =5.71

Days Receivables

365/69.4 = 5.25

365/75.28 = 4.85

365/15.61 = 23.38

365/5.71 = 63.92

Inventory Turnover

352488/43803 =8.05

16725/5308 =3.15

54181000/7411000 = 7.31

7432000/1360000 =5.45

Days Inventory

365/8.05 = 45.34

365/3.15 = 115.87

365/7.31 = 49.93

365/5.45 = 66.97

PPET

469762/116681 = 4.03

27932/8196 = 3.41

74452000/10949000 = 6.8

12148000/2579000 = 4.71

C2C

-1.31

12.74

-73.7

81.24

1.Among the two companies, Walmart has a better cash to cash cycle as a negative C2C suggests that the company receives payment from its customers prior to paying its suppliers. On the other hand, Macy’s takes lesser time to convert its inventory into sales with days’ inventory turnover of just 3.15 and also collects its receivables quite fast with days receivables being 4.85

Walmart’s return on assets is lower in comparison to Macy’s showing that it earns less return per unit of asset.

2. In between Amazon and Nordstrom, Nordstrom has a pretty bad C2C (81.24 days) showing that its supply chain processes requires a second look into them. On the other Amazon has a highly negative C2C (-73.7 days) which may be temporarily good but not in long run. Amazon’s return on asset and that of equity is quite poor in comparison to Nordstrom.