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? (A)</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 (C)</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 (A)</p> Signup and view all the answers

What is the formula to calculate the Current Ratio?

<p>Current Assets / Current Liabilities (A)</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 (A)</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 (A)</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 (B)</p> Signup and view all the answers

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

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

What is Walmart's current ratio?

<p>0.74 (A)</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 (C)</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 (D)</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 (B)</p> Signup and view all the answers

What is the accounts receivable turnover for Walmart?

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

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

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

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