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

functional Capital analysis of Wal-Mart both business decision is associated in one way or another(prenominal) with the financial condition of the organization. The results of a on the job(p) gravid analysis depart assist in the determination of organizations ability to delay in a particular line of business. The primary focus of group Cs analysis of Wal-Mart, Inc is its current and future financial condition. The virtu solelyy imperative beas that are found in the Capital Structure Analysis Report fall into the hobby categories Working Capital Management, Valuation and Investment, and terms of Capital. The go withs operational processes inwardly each area push aside be examined and related financial entropy reviewed. Once the financial data is collected and calculated potential areas for improvements can be identified and disciplinal or innovative measures can be implemented. As in all businesses, which include Wal-Mart, it mustiness be considered that there is always room for improvement. Working Capital Management In order to fully understand the companys financial position a financial manager must consider the amount of net working capital available. The net working capital is the difference between current assets and current liabilities. Companies normally save a positive net working capital. The components of working capital exchange continually within the vibration of operations. (Brealey, 2001) Therefore, an effective manager will supervise the cash conversion periods to determine the length of the production process. The thirster the process, the longer the companys money will be tied up in the process. The two elements in the business cycle that normally force the most cash are inventory and receivables. The main sources of cash are payables and equity or loans. Speeding 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 max imize its use of existing cash flows as well as leverage additional sources of working capital. Underperforming bon ton proportions Although Wal-Mart is performing well all overall and remains a leader within the retail manufacturing, 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 balance_______________________.19__________.17__________.23____ Table BIndustry Averages_____________________________________________________Fiscal Year 2001 2002 2003____LeverageDebt Ratio 1.58 2.2 .53Times saki Earned Ratio .75 1.78 2.46LiquidityCurrent Ratio 3.1 2.8 2.6Quick Ratio .6 .5 .4Net Working Capital .195 .07 .195EfficiencyAsset Turnover Ratio 2.23 2.27 2.2Average Collection Period 12.6 10.4 8Inventory Turnover 5.24 5.38 5.73 gainfulness Net Profit Margin 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 Dun and Bradstreet industry ratios, and www.bloomberg.com.