Wal Mart
Comparison of Financial Performance Results for WalMart
Comparison to Target
Financial Ratios for Walmart
Evaluation of Other Areas of Financial Analysis
Analysis of One year ratio of Walmart and Comparison with Target
Walmart
Walmart has been in business for more than 50 years and at present has a footfall every week of more than 260 million customers in the 11,500 stores under 65 banners in 28 countries and the e-commerce sites in 11 countries. The net sale of the company in 2014 was $476.29 billion. The company has 2.2 million associated across the world. The group recorded a net sale increase of 1.9% in the fiscal year ended January 30, 2015 and it returned $7.2 billion to shareholders through dividends and share repurchases (Annualreports.com, 2015).
Target -- Walmart's Competitor
Target offers perishables, dry grocery, dairy and frozen items and all food items comparable to traditional supermarkets. The company has three primary types of stores -- SuperTarget, CityTarget and TargetExpress. The company recorded a loss of 1.9% in 2014-2015 compared to the previous year with a fall in net earnings of 9.1%. The total sale in the period was $U72.6 billion
Comparison of Financial Performance Results for WalMart
Analysis of Financial Performance of Results of Walmart
There has been a steady increase, though not in any drastic manner, in revenue for Walmart in the three years from 2012 through to 2014. As is the norm, the operating costs have also increased over the three years under consideration. However the costs of sales have also simultaneously increased over the same period. The cost of sale is nearly three fourth of the revenue generated whereas the operating costs is less than one fourth of the revenue. Together the revenue is more than the cost of sale and operating costs which means that the company has a chance of earning profits (Annualreports.com, 2015).
This means that while the revenue has increased, the costs of sales and the operating costs have also correspondingly increased. Hence it can be deducted that the increase in sales is due to the increase in the marketing activities for boosting sales.
The total assets of the company has increased during the same period with some increase in the current assets of the company which means that Walmart has managed to increase its liquidity for the company du ring the same period. The net income of the company has also remained more or less the same with some increase in 2013 and decrease in 2014. The current liabilities of the company have also shown the same tendency as the net income with a slight increase in 2013 and a slight reduction in the next year.
Comparison to Target
In terms of revenue the Target is less than half of that of Walmart. The cost of sale of target is less than one seventh of the same figure of Walmart. The operation costs are also much lower than that of Walmart. The cost of sale for Target is around 70% of the revenue generated while the operational costs are less than 20% of the revenue (Corporate.target.com, 2015).
The annual report of the company shows that there has not been much of a change in the total assets of the company. It increased in 20123 and then decreased in 2014.
However the major difference between the two companies is in the net profits. Target has seen its profits decrease significantly in 2013 compared to 2012. The company suffered losses in 2014. The annual report indicates that the company had made additional provisions for taxes in 2013 and provision for discounted operations and net of tax apart from tax in 2014. This has resulted in the decrease in profits in 2013 and the losses in 2014 (Corporate.target.com, 2015).
Financial Ratios for Walmart
In terms of current ratio, Target is much better placed to Walmart and target has more liquidity to pay off current debts. In terms of profit, Walmart has been able to maintain a steady profit margin whereas the profit margin of Target has consistently lowered and the company suffered a loss in 2014. The steadiness of the company is further established by the ROE while the number has fluctuated for Target -- decreasing in progressively in the three years in consideration until the company incurred a loss in 2014.
The asset turnover ratio -- use of assets to generate revenue, is much better for Walmart compared to target. The Debt to equity ratio for Walmart is also better compared to Tagret which shows that the company has less debt than Target. When we consider the size of the two companies...
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