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Class 2-group-10-wal-mart-pp
- 1. Wal-Mart Stores Inc. FINAL PRESENTATION CLASS 2 GROUP 10
- 2. Group members 1. Vo Tung Thien An 332976 2. Tran Hong Dao 332967 3. Ngo Thi Xuan Uyen 332941
- 3. Outline 1. Introduction 2. Financial Ratios (Walmart vs Costco) 3. Financial Ratios (Walmart vs Industry) 4. Cash Conversion Cycle 5. 3 Changes 6. Conclusion 7. References
- 4. Introduction •Is an American multinational retail corporation. •Was founded by Sam Walton in 1962. •has over 11,000 stores in 28 countries, under a total 65 banners. •Organized into three divisions: Walmart U.S., Sam's Club, and Walmart International. •Offers nine retail formats
- 5. 2 & 3. Financial Ratios
- 6. 2. Walmart vs Costco Liquidity ratios 0.8212 0.8837 0.8648 0.8346 0.8823 1.0663 1.1138 1.1635 1.1948 1.2204 0.0000 0.2000 0.4000 0.6000 0.8000 1.0000 1.2000 1.4000 2008 2009 2010 2013 2014 Current Ratio Walmart Costco
- 7. 0.2199 0.2607 0.2758 0.2247 0.2354 0.4984 0.5314 0.6032 0.5994 0.6336 0.0000 0.1000 0.2000 0.3000 0.4000 0.5000 0.6000 0.7000 2008 2009 2010 2013 2014 Quick Ratio Walmart Costco
- 8. 0.0939 0.1313 0.1424 0.1083 0.1050 0.2951 0.3402 0.3194 0.3503 0.3981 0.0000 0.0500 0.1000 0.1500 0.2000 0.2500 0.3000 0.3500 0.4000 0.4500 2008 2009 2010 2013 2014 Cash Ratio Walmart Costco
- 9. Financial leverage ratios 0.6049 0.6005 0.5865 0.6241 0.6276 0.5556 0.5439 0.5453 0.6423 0.6275 0.4500 0.5000 0.5500 0.6000 0.6500 2008 2009 2010 2013 2014 Debt Ratio Walmart Costco
- 10. 10.5854 10.5687 11.7109 12.4104 11.5593 20.4078 16.9907 19.5045 31.8182 29.2920 0.0000 5.0000 10.0000 15.0000 20.0000 25.0000 30.0000 35.0000 2008 2009 2010 2013 2014 Times Interest Earned Walmart Costco
- 11. 13.5892 13.6543 15.1768 16.1801 15.3580 26.7476 23.7315 26.6667 41.3737 38.3982 0.0000 5.0000 10.0000 15.0000 20.0000 25.0000 30.0000 35.0000 40.0000 45.0000 2008 2009 2010 2013 2014 Cash Coverage Ratio Walmart Costco
- 12. Asset management ratios 8.1444 8.8104 9.3065 8.0428 7.9823 12.6023 11.5328 12.0601 11.6478 11.6436 0.0000 2.0000 4.0000 6.0000 8.0000 10.0000 12.0000 14.0000 2008 2009 2010 2013 2014 Inventory turnover Walmart Costco
- 13. 44.8159 41.4283 39.2198 45.3824 45.7263 28.9630 31.6488 30.2650 31.3363 31.3478 0.0000 5.0000 10.0000 15.0000 20.0000 25.0000 30.0000 35.0000 40.0000 45.0000 50.0000 2008 2009 2010 2013 2014 Days' sale inventory Walmart Costco
- 14. 103.9198 103.5529 98.4761 69.2451 71.3335 96.9024 85.6379 88.1742 87.5570 98.1185 0.0000 20.0000 40.0000 60.0000 80.0000 100.0000 120.0000 2008 2009 2010 2013 2014 Receivables turnover Walmart Costco
- 15. 3.5123 3.5248 3.7065 5.2711 5.1168 3.7667 4.2621 4.1395 4.1687 3.7200 0.0000 1.0000 2.0000 3.0000 4.0000 5.0000 6.0000 2008 2009 2010 2013 2014 Days' sales in receivable Walmart Costco
- 16. 2.3146 2.4743 2.3948 2.3074 2.3262 3.5046 3.2496 3.2730 3.4724 3.4109 0.0000 0.5000 1.0000 1.5000 2.0000 2.5000 3.0000 3.5000 4.0000 2008 2009 2010 2013 2014 Total asset turnover Walmart Costco
- 17. Profitability ratios 0.0336 0.0331 0.0352 0.0363 0.0336 0.0177 0.0152 0.0167 0.0194 0.0183 0.0000 0.0100 0.0200 0.0300 0.0400 2008 2009 2010 2013 2014 Profit margin Walmart Costco
- 18. 0.0779 0.0820 0.0843 0.0837 0.0783 0.0620 0.0494 0.0547 0.0673 0.0623 0.0000 0.0100 0.0200 0.0300 0.0400 0.0500 0.0600 0.0700 0.0800 0.0900 2008 2009 2010 2013 2014 Return on assets Walmart Costco
- 19. 0.1970 0.2053 0.2039 0.2227 0.2101 0.1396 0.1083 0.1203 0.0673 0.1673 0.0000 0.0500 0.1000 0.1500 0.2000 0.2500 2008 2009 2010 2013 2014 Return on equity Walmart Costco
- 20. 3.Financial Ratios Walmart vs Industry Current Ratio: Walmart 0.9 Industry 1.2 0 0.2 0.4 0.6 0.8 1 1.2 1.4 Quick Ratio: Walmart 0.2 Industry 0.3 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 Return on Assets Walmart 8.3 Industry 6.4 0 1 2 3 4 5 6 7 8 9
- 21. 3.Financial Ratios Walmart vs Industry Return on equity: Walmart 0.2 Industry 0.2 0 0.05 0.1 0.15 0.2 0.25 Return on assets: Walmart 0.1 Industry 0 0 0.02 0.04 0.06 0.08 0.1 0.12
- 23. Production Cycle 43.8797 41.8172 40.2977 39.6375 45.1886 36 37 38 39 40 41 42 43 44 45 46 2008 2009 2010 2013 2014
- 24. Collection cycle 3.1716 3.4685 3.6707 4.321 5.2317 0 1 2 3 4 5 6 2008 2009 2010 2013 2014
- 25. Accounts payable cycle 37.2419 35.5287 35.5476 35.501 38.4782 34 34.5 35 35.5 36 36.5 37 37.5 38 38.5 39 2008 2009 2010 2013 2014
- 26. 9.8094 9.7570 8.4208 8.4575 11.9421 0.0000 2.0000 4.0000 6.0000 8.0000 10.0000 12.0000 14.0000 2008 2009 2010 2013 2014 Cash Conversion Cycle
- 27. 5. 3 Changes 2008-2014 Wal-Mart Change % Revenue 97 818 26% Tax provision 1216 18% Net income 3291 26%
- 28. 6. Conclusion Wal-Mart is one of the biggest retail store in US. The market share of Wal-Mart is 65.4% in 2012. Competitors: Costco, Target, Amazon.com They need to change strategies or expand into other segmentation to win competitors
- 29. 7. References •gurufocus. (n.d.). Retrieved from http://www.gurufocus.com/financials/WMT •gurufocus. (n.d.). Retrieved from http://www.gurufocus.com/financials/COST •MORNINGSTAR. (n.d.). Retrieved from http://quicktake.morningstar.com/stocknet/bonds.aspx?symbol=wmt •StockSelector. (n.d.). Retrieved from http://www.stockselector.com/industry.asp?symbol=WMT •YAHOO!FINANCE. (n.d.). Retrieved from http://finance.yahoo.com/q/hp?s=WMT+Historical+Prices •Carter, M. (2014, 3 25). The Motley Fool. Retrieved from http://www.fool.com/investing/general/2014/03/25/what-does-wal-mart-do-in-2014.aspx •Shim, D. (2012, 12 31). iMEDIACONNECTION. Retrieved from http://blogs.imediaconnection.com/blog/2012/12/31/importance-of-market-share-holiday-winners- att-walmart-kohls/
Editor's Notes
- Net working capital of Costco is positive which is more than 1 while WM is negative which is less than 1 because current liabilities are greater than current assets. Moreover, current ratio of WM is increasing by year.
- As we can see, WM quick ratio is lower as twice as Costco. It leads to current assets of WM are lower than current liabilities. This is negative situation.
- Cash ratio of WM is much lower than Costco because current liabilities of WM is greater than Costco. In conclusion, Costco hold more cash or WM may not holding enough cash.
- From 2008 to 2010, debt ratios of WM are higher than Costco. However, in 2013 debt ratio of Costco increase rapidly. Hence, both companies face to the risk because total assets are less than total debt.
- In this chart, WM maintain a steady rate during this period, while Costco try to repay. Especially since 2013, Costco promotes the ability to meet its debt obligations
- Similar to Times Interest Earned, Cash coverage ratio of both companies show that amount of cash available to pay for a borrower's interest expense and Costco still much higher than WM’s ratios
- At a glance, Costco sale more than WM and inventory of WM is high. However, both companies’ ratios decrease slightly from 2008 to 2014
- Because the inventory turnover of WM is lower so Days’ sale inventory of WM is higher than Costco. Hence, WM takes more time to turn its inventory into sale and Costco works more efficiency
- From 2008 to 2010, WM work more effective in collecting debts or using its assets than Costco. However, this ratio decreases while Costco maintain the rate
- If the receivable turnover is high, the day that a company takes to collect revenue after a sale is fewer. WM in 2013 and 2014 takes long time to collect money so WM works less effective than Costco.
- Costco uses assets to generate revenue better than Walmart. Both of companies remain the rate during this period. In conclusion, Costco manage assets better than WM and WM should improve its strategies.
- In general, both company maintain a steady rate. WM ratios seems twice Costco ratios. It shows that the actually money that WM hold twice as Costco done. Then WM control its cost better than Costco.
- Moreover, the higher return on assets figure, the better, because a company earn more money. It shows that WM may invest less than Costco but WM earn more money.
- On average, WM rate around 20%. From 2008 to 2013, Costco ratios less than 14% and fall into 6% in 2013 but it increase almost triple in 2014. Therefore, WM owners earn more profit than Costco owners.
- The liquidity ratios of WM is much lower than the industry. This proves that WM assets and cash are low or its current liabilities is high. More detail, WM current ratios lower than industry twice. WM quick ratios is 4 times lower. Finally, cash ratio of WM is 0.1 while industry is 0.9. Hence, WM has bad problem to meet its short-term cash obligations.
- On the other hand, WM is really good at turning sale or asset into income. The return on equity of WM is equal industry 0.2. However, the return on assets of WM is 0.1 while industry is .0.
- On average, WM needs 42 days to sell the product. The trend from 2008 to 2013 is downward but in 2014 it increase rapidity, about 45 days because the average inventory in 2014 is extremely high, about 44.000 while other years is around 36.000
- This is an upward chart. WM lengthen the days to collect from its customers from 3 days in 2008 to 5 days in 2014.
- About accounts payable cycle, in 2008, WM spends 37 days to pay its suppliers. From 2009 to 2013, WM remain 35 and one-half days to pay. Until 2014, it takes 38 days to pay the suppliers.
- In conclusion, it seems that WM shorten days to convert its product into cash from 2008. However, in 2014, WM must finance its credit sales in 12 days. Hence, the longer cycle, the more time, and thus the worse for WM’s bottom line