Question

tow overall conclusions draw from the numbers ( Walmart)

Liquidity ratios

Current ratio= 79.98%

Quick ratio= 20.22%

Leverage ratio

Debt to equity ratio= 1.59%

Debt to total asset ratio= 60.48%

Activity ratio

Inventory turnover= 11.43%

Total asset turnover= 2.45%

Profitability

Net profit margin = 1.97%

ROA= 4.82%

Growth ratio

Sales= 2.86%

Net income=

Walmart annual net income for 2018 was $9.862B, a 27.71% decline from 2017

i apologize if I do not explain it clearly
can you help me to write a small analysis and conclusions based on the ratios for the company (Walmart)

Answer 1

The outcome of ratio analysis is one of the most important tool used to study the financial stability and capability of the company.

Here,

Net Income = $ 9.862 Billion in year 2018 which is decline by 27.71% from profit of year 2017. Such sudden decline in income is not good for business, even after a growth of 2.86% in sales in the current year . Such situation can be created by some mismanagement or wrong decision making by managers.

Further, current ratio value is 79.98% , Current Ratio = Current Assets / Current Liabilities , which is less than 1 explains, the capital on hand is not sufficient to meet its short-term obligations in case all were due at once. Quick ratio value 20.22% explain the company may have to sell some asset to settle all liability .

Leverage ratio of the company explain the situation of debt and equity portion in capital structure in the company , Debt/Equity ratio = 1.59 , explain higher amount of debt in comparison of equity , this can be a major cause of downfall of net income in year .

• Higher amount of debt increase the interest liability for company
• High interest amount , reduce the net income (Profit after interest and tax)

Similarly Debt / total asset ratio is a concern for the company .

Although , the other profitability ratios are considerably acceptable .