Ratios tell a story assignment Introduction Different people use financial statement for different purposes. The creditors or the lenders want to know about the financial capability of the firm to repay the borrowings. Investors are interested in the profitability position and solvency position of the firm as these generate high return for them in the future…
However, it is very difficult for one to examine the whole financial statements of a company. Ratio analysis makes it easier for everyone to understand the profitability, solvency, and efficiency position of the firm. Ratio Analysis is a tool used for quantitative analysis of the information from the financial statement of a company. In spite of the advantages, ratio analysis has several drawbacks too. It consider only historical data, the future performance of the company cannot be predicted. It helps to evaluate firm’s financial status on the basis of past and present financial data of a company. In this study, comparisons of ratios have been made on different companies according to their financial indicators. A ratio analysis has been conducted to compare the profitability, solvency and efficiency of Wal-Mart and Safeway. Ratio analysis helps to effective analysis of the financial statement. The financial status of the companies can be easily understood by the help of the ratio analysis. Safeway vs. Wal-Mart Safeway Inc is a supermarket whereas Wal-Mart is general merchandise. Wal-Mart can also be classified as hypermarket. Hypermarkets are similar to big-box stores. The business of hypermarket is decisive on high volume, and low margin of sales. Wal-Mart is a typical supercenter covers around 150,000 square feet to 235,000 square feet area. It is the combination of supermarket and departmental stores, mainly situated in suburban or out of town locations. More than 2 lac brands can found here. Whereas Supermarket is a store based upon self service. It presents a huge range of food and household merchandise, divided into sectors. The range of foods and products are limited here rather than supermarket. There is a huge difference between the inventories of these two companies. It is because Wal-Mart sells more than 2 lac of different type of products whereas Safeway is limited with its narrow range of food and household products. Net PP&E are almost same (60%) in case of both the companies, because both of them are involved in retail business. The cash of Safeway is also less than Wal-Mart is due to the size of the business. Wal-Mart is more capable of generating cash in a higher volume to its variety of products. Adobe vs. Hewlett-Packard Adobe Systems Inc. is a software development company and Hewlett-Packard Company is a computer manufacturing company. In a computer manufacturing company, heavy processes are driven for manufacturing new products. The workers are needed to perform a specific task. After the completion of one task the next task can be performed by the next worker. A software development company includes research, development of new product, prototyping, modification, reuse, re-engineering, and maintains of other activities. Hewlett is having fixed assets near about 2 times higher than Adobe. As Hewlett is a manufacturing company it needs more instruments and equipments than Adobe. In case of both short term and Long term debt, Adobe has none of these two because it is a service based company. It does not need extra money to run its business. In case of Hewlett the value of both short term and long term debt is higher. As the company runs factories, it needs money from outside to run its business. Amazon vs. Consolidated Edison, INC Amazon.Com is an internet retailer and Edison Inc has its business on electric utility. When a ...
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In order to compare the ratio analysis results of Target a control company was selected for comparison purposes. The company that will be used to compare the ratio analysis is Costco. Costco is the US 6th largest retailer and the 7th largest retailer in the world.
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