Working Capital Analysis of Wal-Mart Essay -- Business Management Fina

Working capital of the United States Analysis of Wal-Mart Every business decision is associated in one way or another with the financial condition of the organization. The results of a working capital compend will assist in the role of organizations ability to remain in a limited line of business. The primary focus of Team Cs analysis of Wal-Mart, Inc is its current and future financial condition. The most imperative argonas that are frame in the Capital Structure Analysis Report fall into the following(a) categories Working Capital Management, Valuation and Investment, and Cost of Capital. The lodges operating(a) processes within each area put up be examined and related financial data reviewed. Once the financial data is collected and calculated authorisation areas for improvements can be identified and corrective or innovative measures can be implemented. As in all businesses, which include Wal-Mart, it must be considered that there is always room for improvement. Wor king Capital Management In order to fully understand the companys financial topographic point a financial manager must consider the amount of engagement working capital available. The win working capital is the difference between current assets and current liabilities. Companies normally have a positive net working capital. The components of working capital change continually within the daily round of operations. (Brealey, 2001) Therefore, an effective manager will monitor the cash conversion periods to tempt the length of the production process. The longer the process, the longer the companys coin will be tied up in the process. The two elements in the business cycle that normally absorb the most cash are inventory and receivables. The main sources of cash are payables and equity or loans. hurrying up the working capital cycle will generate more cash for the company. www.planware.org This management of working capital will allow the company to maximize its use of existi ng cash flows as well as leverage additional sources of working capital. Underperforming Company Ratios Although Wal-Mart is performing well boilers suit and remains a leader within the retail industry, the company is not without opportunities for improvement. An analysis of the financial ratios for the company over the last three years as well as an industry comparison has identified areas in which the company could enhance its ... ... 3.03 3.26 3.59Payout Ratio_______________________.19__________.17__________.23____ Table BIndustry Averages_____________________________________________________Fiscal division 2001 2002 2003____LeverageDebt Ratio 1.58 2.2 .53Times Interest Earned Ratio .75 1.78 2.46 fluidnessCurrent Ratio 3.1 2.8 2.6Quick Ratio .6 .5 .4Net Work ing Capital .195 .07 .195EfficiencyAsset Turnover Ratio 2.23 2.27 2.2Average Collection full point 12.6 10.4 8Inventory Turnover 5.24 5.38 5.73Profitability Net Profit moulding 3.7 2.8 3.97Payout Ratio_______________________ 32.4__________34.3________34.6___ Tables are a combination of the following resources www.walmart.com, www.reuter.com, www.biz.yahoo.com, UOP library resource chevy and Bradstreet industry ratios, and www.bloomberg.com.