Summary Does Target have adequate liquidity compared to Walmart? Wal-Mart had a 4% net profit margin ratio in the year 2007, and had a net profit margin ratio of 3% as of January 2008. Founded July 2, 1962 Logo Industries served Retail Geographic areas served Worldwide 11,718 stores in 28 countries Headquarters Bentonville, Arkansas, U. To view Intraday Stock Data Java must be installed. With its current earnings, the company could pay the interest on its outstanding debt almost 10 times over. As of the year 2007, Wal-Mart had a debt ratio of.
In 1976, Holck-Larsen was awarded the Magsaysay Award for International Understanding in recognition of his contribution to India 's industrial development. In the beginning, Wal-Mart entered the discount retail industry when it was barely even a market, opening up locations specifically around the mid-west area. Conclusion In conclusion, Target has better liquidity than Walmart, better debt management, and better profitability ratios. These numbers are very impressive given how Wal-Mart borrows very cheaply. Target has a better current ratio over the years, which means that they are more likely to be able to cover their liabilities from their assets coming in. While using leverage is not an inherently bad thing, using too much leverage can place a company in a precarious position.
This part of the balance sheet usually includes things such as bank overdrafts, invoices, expenses, and cash. Debt to Equity 07-08 08-09 09-10 10-11 11-12 12-13 Walmart 0. Target exercises the same kind of leverage over its suppliers. These are two business rivals in the retailer industry. The company can identify better ways of performing tasks, managing stores and hiring new employees and can achieve huge gains by implementing these best practices in its vast network of stores. Please check also to view more equity screening tools Walmart Current Ratio AnalysisCurrent Ratio is calculated by dividing the Current Assets of a company by its Current Liabilities.
Current assets and current liabilities are defined as assets and liabilities falling due within 12 months. Back in 1962, Sam Walton the founder of Wal-Mart probably never imagined that Wal-Mart would reach the astronomical heights that it has. Usually a company that cannot meet short-term creditor demands could be facing an imminent threat of bankruptcy. In the decade that followed, the company grew rapidly, and by 1973 had become one of the Top-25 Indian companies. Walmart is focusing to increase the profitability in China and Brazil especially because Walmart is not achieving high profitability from over these countries. The ratio is regarded as a test of liquidity for a company. Wal-Mart Evaluation Report Analyzing Wal-Mart's annual report provides a positive outlook on Wal-Mart's financial health.
The asset turnover ratio shows how efficiently the company is using their assets. Days sales outstanding gives the average number of days it takes a firm to collect revenue after a sale is complete. It is also taking steps to grow its international presence. Positive sales increments are giving high returns on investments and equities. Below is the list of long term debt with maturity dates and yield to maturity. The Rise and Rise Again of Private Label.
Inventories generally take time to be converted into cash. He began to realize that opportunities existed in the large scale discount retailing business nickel and dime stores. Wal-Mart can raise prices to prove this ratio however their volume of business makes up for this. The quick ratio, which is defined as current assets minus inventory divided by current liabilities, is a measure of a company's ability pay short term obligations. The quick ratio of the company is indicating that the quick assets of the company are not enough to meet the current obligations of the company. For example, Wal-Mart's closet peers, Costco Wholesale and Target , reported quick ratios of 0. Usages of Cash Analysis In connection with how these corporations finance themselves, an analysis of their major usages of cash can be helpful.
Walmart is doing better than Target at asset management. Walmart is operating retail stores in different formats worldwide, it operates apparel stores, warehouse clubs, retail stores, restaurants, supermarkets, discount stores, supercenters and neighborhood markets. Target does however use their assets to pay off their liabilities more easily which should be taken into consideration when applying for a short term loan. Investor must invest in the stocks of Walmart. Wal-Mart still however gathers hundreds of millions of customers and growing. Try any of our Foolish newsletter services. Bianco recounts the elements which made Walton so loved and innovative e.
He retired as Chairman in 1978. Both Walmart and Target have high Interest coverage ratios which looks good to banks when applying for loans. Peers Nonetheless, financial ratios tend to be sector-specific. The Wal-Mart is the 800 pound gorilla in this industry and looks to remain that way. I believe the primary reason why it has more current liabilities than it does current assets is because the capital used to buy wholesale products and sell retail are used heavily to keep business booming. First, the current ratio measures the ability to pay short-term and long-term debts.
If we strip out accounts receivable and inventories, Costco is easily able to cover current liabilities with cash on hand. Though they are still going to grow because Wal-Mart has expanded its operations in emerging markets such as Asia, it will be able to bounce back. They are a very effective company and work very well with what they have. Walmart's cash flow-to-debt ratio has inched upward over the past decade, a trend that should give investors confidence in the company's continued financial health. The Motley Fool recommends Costco Wholesale. First, I must say that this was an enjoyable read. Walmart has great growth pattern and it is making a difference in its approaches comparatively to its competitors.