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Financial Ratios Project - Case Study Example

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This ratio rises in both companies but the current ratio in Target Corp. over the three years has been better than that of Wal-Mart Inc. since it slightly higher…
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Financial Ratios Project
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Download file to see previous pages The figure in Wal-Mart is lesser than one though higher than that in Target (
The receivables turnover ratio measures a companies’ effectiveness in collecting debt. Target’s ratio increases by a bigger margin than that of Wal-Mart over the three years. However, the receivables turnover ratio of Wal-Mart is still higher than that of Target. The inventory turnover ratio measures the effectiveness of a company in converting its inventory to sales. The ratio in Target decreases slightly over the three-year period while that in Wal-Mart increases.
The asset turnover measures the management’s effectiveness in utilizing the company assets to produce sales. This ratio increases by a bigger in margin over the three years in Target than in Wal-Mart though Wal-Mart still has a higher a ratio. The profit margin indicates how much profit is generated from a company’s sales. This ratio fluctuates in Target over the three years while it remains constant with slight changes in Wal-Mart.
Return on assets ratio measures a company’s effectiveness in utilizing assets to generate profits. Target’s return on assets ratio fluctuates over the three years. Wal-Mart’s ratio is higher than that of Target despite it decreasing slightly. The return on equity measures a company’s effectiveness in utilizing shareholder equity to generate profit. This ratio fluctuates in Target as it decreases slightly in Wal-Mart. Despite this, Wal-Mart ratio is still higher than that of Target (
The debt to assets ratio measures the leverage level of the company in relation to its assets. Target’s debt to assets ratio is higher than that of Wal-Mart over the three years. Free cash flows ratio shows the amount of cash flow, which is attributable to the equity holders and debt holders of a company. The ratio fluctuates in both the companies though the one in Wal-Mart is higher. Times interest, earned ratio shows the ability of ...Download file to see next pagesRead More
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