Financial Ratios of Walmart and Target
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Questions and Answers

What is the primary concern of major suppliers when deciding to extend credit to a company?

  • Evaluating the company's profitability
  • Analyzing the company's asset financing
  • Determining the company's credit terms
  • Assessing the company's liquidity (correct)

    • What does the liquidity of a firm measure?

  • The firm's ability to generate profits
  • The firm's ability to pay its bills on time (correct)
  • The firm's asset utilization efficiency
  • The firm's financing costs

    • What type of asset can be quickly converted into cash at the current market price?

  • Intangible asset
  • Tangible asset
  • Liquid asset (correct)
  • Fixed asset

    • Which of the following is NOT a question that can be answered by using ratios?

    <p>What is the firm's market capitalization?</p> Signup and view all the answers

    What is the primary purpose of analyzing a company's key financial relationships?

    <p>To assess the company's liquidity and financial performance</p> Signup and view all the answers

    What is the primary purpose of liquidity analysis?

    <p>To assess a firm's ability to pay its short-term debts</p> Signup and view all the answers

    What is the formula to calculate the Current Ratio?

    <p>Current Assets / Current Liabilities</p> Signup and view all the answers

    According to Walmart's Income Statement, what is the Operating Income (Earnings Before Interest and Taxes) for the year ending January 31, 2018?

    <p>$20,437</p> Signup and view all the answers

    What is the total value of Walmart's Current Assets as of January 31, 2018?

    <p>$59,664</p> Signup and view all the answers

    What is the purpose of the Acid Test or Quick Ratio?

    <p>To assess a firm's liquidity</p> Signup and view all the answers

    What is Walmart's Total Debt as of January 31, 2018?

    <p>$80,203</p> Signup and view all the answers

    What is Walmart's current ratio?

    <p>0.74</p> Signup and view all the answers

    What is the main difference between the current ratio and the acid test or quick ratio?

    <p>The current ratio includes inventory, while the quick ratio excludes it</p> Signup and view all the answers

    What is the advantage of using the quick ratio over the current ratio?

    <p>It provides a more accurate picture of a company's liquidity</p> Signup and view all the answers

    What does the days in receivables or average collection period measure?

    <p>The number of days it takes to collect accounts receivable</p> Signup and view all the answers

    What is the accounts receivable turnover for Walmart?

    <p>35.65 times per year</p> Signup and view all the answers

    How does Walmart's liquidity compare to Target's?

    <p>Walmart is slightly less liquid than Target</p> Signup and view all the answers

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