Reccommendation memo - Essay Example

, Treasurer , Jr. Financial Analyst Re: Comparative Analysis of Top Five Competitors 19 June Thank you for your query regarding the comparative analysis of the top five competitors in the household industry. For this comparative analysis, five companies have been selected which are Wal-Mart, Kroger, Target, Walgreen and Home Depot such their financial activities are analyzed over a period of five years from 2007 to 2011.In terms of Capital Expenditure, Wal-Mart has turned out to be the leader in terms of making expenditures such that it remained around $12 million on consistent basis.

On the other hand, the other four competitors have made capital expenditures of just around $2 million per annum. As far as financing is concerned, Wal-Mart once again showed its supremacy by making financing of at least $8 million every year. The other competitors however hardly managed to obtain $4 million on yearly basis. In terms of earning profits, Wal-Mart has performed substantially well and increased its earnings from $12 million to around $16 million in five years time. None of the other companies managed to cross even $4 million in any of the five years.

Operating outflows of Wal-Mart are also quite unmatchable due to the larger size such that it remained between $10 million and $16 million in five year times. Target, another industry competitor, achieved a level of $4 million thrice in five years. However, other competitors remained far behind and hardly managed to reach $2 million in any of the five years. Wal-Mart also remained successful in reflecting the best Return on equity as compared to its competitors such that its average ROE remained around 21.5%. However, the other four competitors barely managed to earn ROE of around 17% on average basis.

Lastly, except the yearly sales of Wal-Mart which remained around $400 million on average basis, the other four industry participants did not even reach to the sales level of around $100 million in any of the year.It is recommended that the performance of Wal-Mart has remained substantially well as compared to other four companies. The other four companies however have remained similar in their performance in the last five years.Should you require any further information in this regard, you may consult me during the office hours.

I will be pleased to you clarify the issues, if any.