3.1a: Liquidity ratios measure the ability to pay-off short term debts. Based on five years of collected data, we can state that Wal-Mart has difficulty to pay its short-term liabilities using short-term assets, which can be seen with a Current Ratio UNDER 1.
Asset Management ratios indicates how much revenue is coming from the assets. Wal-Mart’s Total Asset Turnover ratio is currently higher than the Industry average. This means that our company is performing better than the average company in the retail industry. The higher the ratio, the more revenue per dollar of asset the company generates.
Debt Management is the percentage of financial resources that come from debt. Debt Ratio is the ratio total debt divided by total assets. The lower the percentage, the better. As it decreases, financial risk of the company goes down. Our firm is riskier than the average company is currently.
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It shows how fixed costs affect sales volume. Our firm is not good at comparing its profit margin than the industry average which means we are not earning as much on each sale as the average company in the retail industry. Similarly to profit margin, our Operating Margin is lower than the industry average which means that we are not earning as much before interest and tax as others in the retail industry. ROA measures how much profit you make compared to total assets, and shows how efficient you are at creating profit from assets. ROE measures how much income a company is able to make using the money that their investors invested. Our firm is not performing well compared to the amount of investment the industry