Financial Analysis - Wal-Mart\Target

3.2 Financial Analysis Wal-Mart vs. Target: The Basis for your Ongoing Analysis

Financial diagnostic categories

Ratio

WalMart

Target

Commentary, which company is 'better' and why

FORMULA

1.) Liquidity Management

-Current ratio

 0.861

 0.943

Notes here: Target looks to have more liquidity on hand. With higher liquidity ratios, they have more leverage with borrowing funds and reinvesting in the company.

ca/cl

-Cash ratio

0.102 

 0.197

cash/CL

-Quick ratio

 0.218

 0.289

(ca -inv)/cl

2.) Debt Management

Debt/Assets

 0.608

0.707 

Notes here: Wal Mart – Wal-Mart looks to be in better position in having a lower debt measurement across of Debt Management. With these lower ratios, Walmart can have more cash on hand to operate.

d/a

Debt/Equity

 1.555

2.417 

d/e

EBIT/Interest

 9.659

4.949 

ebit/interest

3.) Profitability

Profit Margin

 0.028

 0.039

Notes here: Target – Target has higher profitability compared to Wal-Mart. They are getting more on their assets and more in equity than Wal-Mart.

ni/s

Return on Assets

 0.068

0.073 

ni/a

Return on Equity

 0.175

0.249 

ni/e

4.) Asset Management

Total asset turnover

2.443 

1.856 

Notes here: Wal-Mart has a better control of asset management as they have higher ratios which means that they are generating more revenue.

s/ta

Inventory turnover

 8.392

 5.881

cogs/inv

A/Receivable turnover

 83.268

59.448 

s/ar

5.) Market Value

Price/Earnings ratio

 21.31

11.98 

Notes here: WalMart has the advantage in having a higher Price/Earnings Ratio. This means that investors can anticipate higher growth in the future. Target has higher earnings per share which gives shareholders or investors a potential better return.

yahoo finance

Earnings per Share

 4.16

 4.95