Financial Analysis Of Wal-Mart Company

Wal-Mart is the premier location in America for all of one’s worldly needs. It’s the household name that comes to mind when even thinking of “going to the store,” and has built a lucrative empire of connecting locations since 1962 when it came into existence. Wal-Mart is the world’s biggest company by revenue, and has managed to stay king of the hill in that regard for many, many years. Despite the juggernaut Wal-Mart is, like any other business it is no stranger to issues and hurdles other companies have to overcome as well. The undulating stages of growth and contraction in economics make assessing the long-term financial status more effective than the day-to-day reports. Over the past decade’s worth of financial data, Wal-Mart will be evaluated financially to see how they are presently faring in the final quarter of 2018.

The abstract of Wal-Mart’s financial data contained in their ratios are all currently pointing to a leveling-off at best, and a downturn at the worst. This can reflect a lot of different things however without context, and without considering the whole picture. For example, Wal-Mart’s returns on assets have been undulating over the past decade, but have overall gone down in recent years, and this is a measure used to determine how profitable a business is based on how the company is currently leveraging their assets. The reason that this can be misleading is because of Wal-Mart’s scope. Wal-Mart has set up shop in every state, and just about every several miles one can be found in the form of gigantic superstores primarily, but very few smaller locations remain from before. Wal-Mart has effectively ran themselves out of space due to how big their superstores are, and with all of the building and zoning codes being thrown into the mix for consideration, it has made it harder for them to use their assets as they are plateauing so to speak. The company’s current ratio, which determines a company’s ability to repay short and long-term debt has undulated in the same fashion as return on assets, but has made an overall climb since 2008, which is the earliest point we will be evaluating financial data from. This figure has been on the down-trend since 2015, and shows that in addition to the return on assets that Wal-Mart is perhaps loosing leverage they once had as a business.

Wal-Mart’s quick ratio is also on the down-trend since 2015, and correlates in a manner that makes sense with the current ratio from before. This measure has improved overall over the past decade, but seems to suggest Wal-Mart has been taking more losses and cannot use their liquid assets as readily. Long-term debt and assets has remained largely the same with some typical undulation over the past decade. Debt is for all intents and purposes a good thing for a business to have if they are leveraging resources correctly. The fact that this has remained largely the same is good, as it seems Wal-Mart is following a well-defined line of how much debt they should assume. Another aspect Wal-Mart must be proficient in is their relationship with suppliers as they are in the wholesale business.