Logan Guild / Case studies

Management Case 3: Target vs. Walmart Financial Ratios

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Financial ratios and conclusions

Measure	Formulas:	Target	Walmart	Conclusions
Liquidity Ratios:
Current Ratio	Current Assets / Current Liabilites	0.9353334295	0.487080935	Target has better short-term liquidity than Walmart, but both are below 1.0, meaning neither company has enough current assets to fully cover short-term liabilities.
Quick Ratio	(Current Assets - Inventories) / Current Liabilities	0.3433338141	0.2463606809	Walmart is more dependent on inventory than Target to cover liabilities.
Leverage Ratios:
Debt-to-Equity Ratio	Total Liabilities / Equity	2.938974499	1.669850141	Target uses more debt financing relative to equity than Walmart, indicating a higher risk business model.
Profitability Ratios:
Basic Earnings Per Share	Profit / # of Common Stock Shares Outstanding	8.88575152	2.417112299	Target makes more money per share than Walmart does.
Net Profit Margin	Profit / Sales	0.03838935495	0.02854101045	Target is more profitable per dollar of sales than Walmart.
Return on Assets	Profits / Assets	0.0708165279	0.07451796812	Walmart generates slightly more profit from its assets than target.
Return on Equity	Profits / Stockholder Equity	0.2789444975	0.1995052401	Target provides a higher return to shareholders than Walmart.
Activity Ratios:
Inventory Turnover	COGS / Average Inventory	6.213108097	9.193690659	Walmart turns over its inventory at a much faster rate than Target.
Asset Turnover Ratio	Sales / Total Assets	1.84469179	2.610908547	Walmart turns over assets more quickly than Target as well.