Walmart And The Financial Crisis - 1785 Words

In today’s society, the world’s largest companies and their financials have to be scrutinized more than at any other point in history. Top companies in the U.S. have been growing at rapid rates over the decades and require in-depth analysis to satisfy the high demands of investors. Especially at the time of the latest financial crisis, financial statements of public companies provided key information to worried investors looking for the best possible way to protect their investments. During the years of the financial crisis and the years leading up to it, Walmart was one of the big companies to watch. Walmart’s financial statements continually showed performance improvements year over year. Many profitability and risk ratios of†¦show more content†¦Today, the company is the world’s largest retailer and the world’s largest private employer. Walmart is also currently comprised of three different businesses: Walmart Stores U.S., Internatio nal, and Sam’s Club. The Walmart Stores U.S. is broken down into Discount Stores, Supercenters, and Neighborhood Markets. This group is the largest among the three businesses and represented over 60% of gross sales in 2008. The other two businesses are much smaller than Walmart Stores U.S. but still operate on a substantial size compared to other retail companies. One of Walmart’s unique strategies deals with its inventory turnover. The company centralizes its inventory through regional distributions centers and has been able to run nearly 80% of all merchandise through these centers. In the years that led up to the financial crisis, Walmart was able to maintain good standings through its financial statements. To start, the company’s Return on Assets (ROA) will be analyzed to understand how the company continually showed strong data for investors. (Although Walmart’s ROA had little change throughout the three year period from 2006 to 2008, one must remember that there was a recession that was negatively impacting large companies worldwide.) The ROA can be calculated by taking the net income and dividing it by total assets. This formula yields a ratio that indicates how profitable a company is related to its assets. To