From this ratio analysis please explain the condition for Wa

From this ratio analysis please explain the condition for Walmart Company. (Explain each ratio for Walmart Company)

Financial Ratios L 2016 | 2017 0-YChangel 2018 kerchangel Debt Management Ratios: Debt Ratio Debt to Equity Days Payables Outstanding (DPO Interest Coverage (Times Intere 58.11%| 143.98%) 59.49%| 152.05%) 0.023883579| 0.056034046 60.48%) 158.86%) 0.016605905 0.044781569 38.92 41.86 0.07573476545.06 0.076278292 9.55 0.007102869 9.46 9.62 -0.016582448 Profitability Ratios: Profit Margin on Sales Gross Margin Basic Earning Power Return on Assets (ROA) Return on Equity (ROE) 3.05%) 25.13% 12.08%) 7.36%) 18.24%) 2.81%)-0.078678442 0.020727| 11.45%)-0.052040803| 6.86%)-0.067995419| 17.54%) -0.03873| 1.97%)-0.298043731 25.37%)-0010763601 10.88%)-0.049848454 4.82%)-0.297273908 12.66%)-0.2777975561 25.65%

Solution

Debt Ratio which is Debt to Asset ratio is very high for Walmart which indicates that Walmart is highly leverages and risk of business has increased significantly.

Debt to Equity Ratio is increasing which shows that Walmart is financing its business through more of debt than through equity or Retained earnings.

Days Payable Outstanding has increased which indicates that cash position due to account payable has increased. More DPO more is the cash flow.

Interest Coverage Ratio = EBIT/Interest. . Since Times Interest earned is negative Future loans will be at higher rate of interest and if this ratio increases banks might not provide loans. The Interests are not paid from earnings of core operation. Rather they might be pad from other sources of funds.

Profitability ratios:
Profits Margins(Net Income/Sales) are decreasing that means the Net income has decreased more over the years.

Gross Margin has decreased which means the Revenue minus Cost of goods sold has decreased too. Hence it has affected Gross profit margins.

Basic Earning Power. =EBIT/Total Assets has creased indicating that EBIT has not increased as much as the increased in assets. It indicates addition of assets have not caused higher EBIT.

Return on Assets: Return on assets has decreased indicating Net income to assets have kept on decreasing indicating the decrease in efficiency in using assets to generate Net income .

Return on equity : the investors and equity holders are getting less return on their equity shares over the years as net income have kept on decreasing making the stocks less favourable


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