Calculate selected ratios and obtain industry averages for comparison.
For each of the financial statement ratios listed below calculate the ratio for the current year and for the prior year. (Note that in most textbooks, some of the ratios call for averaging the beginning and ending balances. However, for this project, use only the year's ending balances.) After calculating the ratio, compare your calculations with the industry ratio as shown in Moneycentral's "Key Ratios" under "Financial Results". Note that there are six or seven groups of ratios in which these ratios might be contained:
a. Current Ratio
b. Inventory turnover (not applicable to service companies)
c. Debt to Equity ratio (Total liabilities divided by Total equity)
d. Net Profit Margin (Net Income as a percentage of Sales)
e. Return on Equity
f. Price earnings ratio (P/E Ratio) [Divide the current market price from a recent newspaper listing by the "basic" earnings-per-share shown on the most recent year's income statement.]
ABOVE IS THE REQUESTED INFROMATION.
Company is Walmart. Requesting your views.
Using Microsoft Word, write a paper (three to five typewritten pages, 1½ line spacing) containing the following:
(a) Describes the primary business activity of the company
(b) A table listing the financial statement ratios listed above in which you list ratio figures for the most recent full year, prior year and industry average.
(c) Explain what the ratio means and how it should be interpreted, and comment on the trend from last year to this (favorable or unfavorable), and how your company's current year compares with the average for its industry.
(d) Earnings Per Share trend is the principal benchmark for investors. Use Excel to present a bar graph showing Earnings Per Share for the last three to five years (EPS figures for several years are generally shown in the Annual Report).
(e) After commenting on each ratio individually, write a summary which presents your assessment of (1) the company's liquidity and debt situation, and (2) its profitability.