Question

This assessment addresses the following course objective(s):

• Analyze balance sheet equity entries.

  Throughout this course you have been researching one of the following companies:

• Target (TGT)
• Walmart (WMT)
• Walgreens (WAG)
• CVS (CVS)
• Kroger (KR)

You have been sharing research you have found in the weekly discussions and compiled a list of resources supporting your research and opinion. In unit 5, you submitted a reference list to support your research into the financial health of your company.

In unit 6 you submitted the ratio analysis after compiling three years of data for your company.

You are now ready to prepare to complete a financial analysis on the company that you have been following this term.

In this assignment you will complete a 4-5 page paper discussing the company’s financial health through a discussion of the ratio calculations. The ratios should be the basis for your discussion looking at the trends determining which areas are improving and eroding. Be sure to make a final conclusion as to your opinion of the overall health of your company. Your paper should be supported with at least four outside references beyond the textbook and Hoovers.

Paper Outline

1. Introduction
2. Provide background about the company
3. Discussion the company’s liquidity ratios
4. Discuss the company management ratios
5. Discuss the company’s debt ratios
6. Discuss the company’s profitability ratios
7. Discuss the company’s market ratios
8. Discuss the overall assessment of the financial health of the company
9. Conclusion

                                              

Answer 1

Company Name: Target Corporation

Introduction

A Company’s liquidity ratio, management ratio, debt ratio, profitability ratio, market ratio does the assessment of a company in context of how much a company is liquid and how a company is using its assets to generate the revenue for a company and the ratio of debt and equity capital of a company. Profitability ratio showcase that how much company earns in relation to its cost and expenses. The market ratio encompasses the market rate of a company.

Company Liquidity ratio:

Current Ratio: 1: 0.89

Quick Ratio:1: 0.21

Cash Ratio :1: 0.18

The ideal current ratio is 2: 1 and company’s is not a win situation as it is less than the ideal one.

The ideal Quick Ratio is 1: 1 and company’s not in a win situation as the ratio show the company has not relatively financial position.

The ideal Cash Ratio is 1: 2 and it showcase that company is not doing cash management properly.

Asset Turnover Ratio:

Net fixed asset turnover: 2.93

Total asset turnover: 1.80

Equity turnover : 6.52

The company’s fixed asset turnover ratio is higher it means that the company is effectively generating sales through its fixed assets.

The company’s overall asset turnover ratio is lower than the fixed assets it means that the company is not effectively generating sales through its total assets.

The company’s equity turnover ratio is higher it means that the company is effectively generating sales through its equity funds.

Company Debt Ratio:

Debt to equity: 1:0.97

Debt to capital: 1: 50

Debt to assets : 1: .27

The company’s debt to equity ratio showcase that company’s debt is more than its equity capital.

The company’s debt to capital ratio showcase that company’s is owing 50% of the total capital in the form of debt.

The company’s debt to assets ratio showcase that how much company owns in relation to its assets.

Profitability Ratio:

Return on asset : 1: 7.6

Return on equity : 1: 27.62

The company’s return on assets ratio showcase that company is generating higher profits from its total assets.

The company’s return on equity ratio showcase that company is generating higher profits from its equity capital .

Market Ratio:

=market value/book value

=123.70/23.47

=5.26

This ratio showcase that company’s market value is overvalued in relation to its book value.

As target corporation liquidity ratio is not in a favourable situation they are under assessed for financial performance.

Now it is concluded that company’s needed to reduce its debt capital to decrease uncertainity.

Company Name: Walmart

Introduction

A Company’s liquidity ratio, management ratio, debt ratio, profitability ratio, market ratio does the assessment of a company in context of how much a company is liquid and how a company is using its assets to generate the revenue for a company and the ratio of debt and equity capital of a company. Profitability ratio showcase that how much company earns in relation to its cost and expenses. The market ratio encompasses the market rate of a company.

Company Liquidity ratio:

Current Ratio: 1: 0.79

Quick Ratio:1: 0.29

The ideal current ratio is 2: 1 and company’s is not a win situation as it is less than the ideal one.

The ideal Quick Ratio is 1: 1 and company’s not in a win situation as the ratio show the company has not relatively financial position.

Asset Turnover Ratio:

Total asset turnover: 7.56

Equity turnover : 36.82

The company’s overall asset turnover ratio is that it means that the company is not effectively generating sales through its total assets.

The company’s equity turnover ratio is higher it means that the company is effectively generating sales through its equity funds.

Company Debt Ratio:

Debt to equity: 1.92

The company’s debt to capital ratio showcase that company’s is owing more than 50% of the total capital in the form of debt.

Profitability Ratio:

Return on asset : 1: 6.42

Return on equity : 1: 18.64

The company’s return on assets ratio showcase that company is generating lesser profits from its total assets.

The company’s return on equity ratio showcase that company is generating higher profits from its equity capital .

Market Ratio:

=market value/book value

=143.85/28.79

=5

This ratio showcase that company’s market value is overvalued in relation to its book value.

As target corporation liquidity ratio is not in a favourable situation they are under assessed for financial performance.

Now it is concluded that company’s needed to reduce its debt capital to decrease uncertainity.

Company Name: Walgreens

Introduction

A Company’s liquidity ratio, management ratio, debt ratio, profitability ratio, market ratio does the assessment of a company in context of how much a company is liquid and how a company is using its assets to generate the revenue for a company and the ratio of debt and equity capital of a company. Profitability ratio showcase that how much company earns in relation to its cost and expenses. The market ratio encompasses the market rate of a company.

Company Liquidity ratio:

Current Ratio: 1: 0.67

Quick Ratio:1: 0.32

The ideal current ratio is 2: 1 and company’s is not a win situation as it is less than the ideal one.

The ideal Quick Ratio is 1: 1 and company’s not in a win situation as the ratio show the company has not relatively financial position.

Asset Turnover Ratio:

Total asset turnover: .50

Equity turnover : -11.68

The company’s overall asset turnover ratio is in a good ratio it means that the company is effectively generating sales through its total assets.

The company’s equity turnover ratio is in negative figure it means that the company is not effectively generating sales through its equity funds.

Company Debt Ratio:

Debt to equity: 1:3.12

The company’s debt to equity ratio showcase that company’s debt is less than its equity capital.

Profitability Ratio:

Return on asset : 1: .50

Return on equity : 1: 2

The company’s return on assets ratio showcase that company is generating higher profits from its total assets.

The company’s return on equity ratio showcase that company is generating higher profits from its equity capital .

Market Ratio:

=market value/book value

=38.04/24.42

=5.26

This ratio showcase that company’s market value is close to in relation to its book value.

As target corporation liquidity ratio is not in a favourable situation they are under assessed for financial performance.

Now it is concluded that company’s needed to improve its equity turnover ratio.

Company Name: CVS

Introduction

A Company’s liquidity ratio, management ratio, debt ratio, profitability ratio, market ratio does the assessment of a company in context of how much a company is liquid and how a company is using its assets to generate the revenue for a company and the ratio of debt and equity capital of a company. Profitability ratio showcase that how much company earns in relation to its cost and expenses. The market ratio encompasses the market rate of a company.

Company Liquidity ratio:

Current Ratio: 1: 0.98

Quick Ratio:1: 0.72

The ideal current ratio is 2: 1 and company’s is not a win situation as it is less than the ideal one.

The ideal Quick Ratio is 1: 1 and company’s not in a win situation as the ratio show the company has not relatively financial position.

Asset Turnover Ratio:

Total asset turnover: 1: 3.64

Equity turnover : -17.37

The company’s overall asset turnover ratio is in a good ratio it means that the company is effectively generating sales through its total assets.

The company’s equity turnover ratio is in negative figure it means that the company is not effectively generating sales through its equity funds.

Company Debt Ratio:

Debt to equity: 1:1.06

The company’s debt to equity ratio showcase that company’s debt is less than its equity capital.

Profitability Ratio:

Return on asset : 1: 3

Return on equity : 1:12.66

The company’s return on assets ratio showcase that company is generating higher profits from its total assets.

The company’s return on equity ratio showcase that company is generating higher profits from its equity capital .

Market Ratio:

=market value/book value

=65.22/49.23

=1.32

This ratio showcase that company’s market value is close to in relation to its book value.

As target corporation liquidity ratio is not in a favourable situation they are under assessed for financial performance.

Now it is concluded that company’s needed to improve its equity turnover ratio.