Question

gives abbreviated balance sheets and income statements for Walmart. Calculate the following using balance-sheet figures from the start of the year.

1. a) Return on assets. The tax rate is 34.5%

2. b) ROE

3. c) Assets turnover

4. d) Inventory turnover and average days in Inventory

5. e) Total Debt to Equity ratio.

6. f) Current ratio.

7. g) Quick ratio

Table 28.8 Balance sheets and income statement for Walmart, fiscal 2017 and 2016 (figures in $ millions) Fiscal 2017 Fiscal 2016 Balance Sheet Assets Current assets: Cash and marketable securities 6.756 $ 6.867 Accounts receivable 5.614 5.835 Inventories 43.783 43,046 Other current assets 3.511 $ 59,664 1.941 $ 57,689 Total current assets Fixed assets: Net fixed assets $ 114,818 S 114,178 Other long-term assets 30.040 26.958 Total assets $204,522 $198.825 Liabilities and Shareholders' Equity Current liabilities: Accounts payable Other current liabilities $ 46,092 32.429 $78,521 $ 41,433 25.495 $ 66,928 Total current liabilities Long-term debt Other long-term fiabilities 36,825 11,307 $126.653 42.018 12.081 $121,027 Total liabilities Total shareholders' equity 77.869 77,798 Total liabilities and shareholders' equity $204,522 $198.825 Income Statement Net sales $500.343 $ 485,873 Cost of goods sold 373,396 361.256 Selling, general, and administrative expenses 95,981 91.773 Depreciation 10.529 10.080 Earnings before interest and tax (EBIT) $ 20.437 $ 22.764 Interest expense 2.178 2.267 Taxable income $ 18,259 $ 20.497 Tax 4,600 6,204 Net income $ 13,659 $14.293

Answer 1

a) Return on Assets

2016

Net Income/Total assets = 14293/198,825 = 7.18 %

2017

13,659/204,522= 6.67%

b) ROE

2016

Net Income/ Total Equity = 14293/77,798 = 18.37%

2017

13,659/77,869 = 17.54%

c) Assets Turnover

2016

Sales/ Assets = 485,873/198,825 = 2.44 times

2017

500,343/204,522 = 2.44 times

d) Inventory Turnover and average days in inventory

2016

Inventory turnover = COGS/ Inventory = 361,256/43,046 = 8.39 times

2017

373,396/ 43,783 = 8.52 times

e) Total Debt to Equity ratio

2016

Total liabilities/ Equity = (121,027 / 77,798) = 1.55

2017

126,653/77,869 = 1.62

f) Current Ratio

2016

Current Assets/ Current Liabilities = 57,689/66,928 = 0.86

2017

Current Assets/ Current Liabilities = 59,664/78,521 = 0.75

g) Quick Ratio

2016

(CA- Inventory)/ Current Liabilities = (57,689 - 43,046)/66,928 = 0.22

2017

(59,664- 43,783)/78,521 = 0.202