Question

Wal-Mart’s Liquidity ratios: what is the three-year trend?

Walmart Inc Balance sheet(s) Walmart Inc Income Statement(s) ..2015 ..2014 ..2013 9,135,000 6,778,000 45,141,000 2,224,000 63,278,000 116,655,000 18,102,000 5,671,000 203,706,000 7,281,000 6,677,000 44,858,000 2,369,000 61,185,000 117,907,000 19,510,000 6,149,000 204,751,000 7,781,000 6,768,000 43,803,000 1,588,000 59,940,000 116,681,000 20,497,000 5,987,000 203,105,000 Period Ending Assets Current Assets Cash And Cash Equivalents Accounts Receivable Inventory Other Current Assets Total Current Assets Fixed Assets Goodwill Other Assets Total Assets Liabilities Current Liabilities Accounts Payable Current Portion Long Term Debt Other Current Liabilities - Total Current Liabilities Long Term Debt Deferred Long Term Liability Minority Interest Total Liabilities Misc Stocks Options Warrants Common Stock Retained Earnings Capital Surplus Other Stockholder Equity Total Stockholder Equity ..2015 ..2014 ..2013 Total Sales 485,651,000 476,294,000 468,651,000 (Supplier Purchases) Cost of Goods Sold 365,086,000 358,069,000 352,297.000 Gross Profit 120,565,000 118,225,000 116,354,000 Selling and General Administrative 93,418,000 91,353,000 88,629,000 Operating Profit 27,147,000 26,872,000 27,725,000 Total Other Income/Expenses Net 113,000 119,000 186,000 Earnings Before Interest And Taxes 27,034,000 26,753,000 27,539,000 Interest Expense 2,461,000 2,335,000 2,249,000 Income Before Tax 24,573,000 24,418,000 25,290,000 Income Tax Expense 7,985,000 8,105,000 7,958,000 Net Income From Continuing Ops 16,588,000 16,313,000 17,332,000 Discontinued Operations 285,000 144,000 52,000 Net Income 16,303,000 16,169,000 17,280,000 14,000,000 shares outstanding Earnings per share USE THESE PRICES Price per share $ 10.00 $ 9.00 $ 8.00 Price to Earnings Ratio 58,583,000 6,689,000 65,272,000 43,692,000 8,805,000 4,543,000 122,312,000 57,174,000 12,082,000 89,000 69,345,000 44,559,000 8,017,000 5,084,000 127,005,000 59,099,000 12,719,000 196000 72,014,000 41,417,000 for ratio 7,613,000 5,395,000 126,439,000 116,000 202,000 72,978,000 4,000,000 -630,000 76,666,000 323,000 85,777,000 2,462,000 -7,168,000 81,394,000 323,000 76,566,000 2,362,000 -1,505,000 77,746,000 Total Liabilities + Stockholder Equity 203,706,000 204,751,000 203,105,000

Answer 1

Liquidity ratio includes various ratio which help to determine the ability of a company to pay off its short term obligation.

LIQUIDITY RATIO: FOR YEAR 2015

Current Ratio = Current assets/ Current liabilities = 63278000/65272000 = 0.97

Quick Ratio = Current assets - inventory / current liabilities = 63278000 - 45141000/65272000 = 0.28

Basic defense Ratio = (cash + receivable + market securities ) / ( Operating expenses + interest + Taxes /365)

= ( 9135,000 + 6778000 + 323000) / ( 93418000 + 2461000 + 7985000/365)

= 16236000 / 284558.90

= 57.05

Absolute liquidity ratio = cash + marketable securities/ Current liability

= 9135000 + 323000 / 65272000

= 0.14

LIQUIDITY RATIO : FOR YEAR 2014

Current Ratio = Current assets / current liabilities = 61185000/69345000 = 0.88

Quick Ratio = Current assets - inventory / current liabilities = 61185000 - 44858000/ 69345000 = 0.24

Basis defense ratio = ( cash + receivable + Marketable securities) / ( Operating expenses + interest + taxes/365)

= ( 7281000 + 6677000 + 323000)/ ( 91353000 + 2335000 + 8105000/365)

= 14281000 /278884.93

= 51.20

Absolute liquidity ratio = cash + Marketable securities/ current liabilities

= 7281000 + 323000 / 69345000

= 7604000 / 69345000 = 0.11

LIQUIDITY RATIO : FOR YEAR 2013

Current ratio = Current assets / Current liabilities = 59940000/72014000 = 0.83

Quick ratio = Current assets - Inventory / current liabilities = 59940000 - 43803000 / 72014000 = 0.22

Basis defense ratio = ( cash + receivable + Marketable securities ) / ( operating expenses + Interest + Taxes/365)

= (7781000 + 6788000 + 282000)/ (88629000 + 7249000 + 7985000/365)

= 14591000 / 284556.26 = 51.27

Absolute liquidity ratio = (cash + marketable securities) / Current liabilities

= (7781000 + 282000) / 72014000

= 8063000 / 72014000 = 0.11