BACHELOR IN BUSINESS ADMINISTRATION

SEMESTER 3

BBA6053 – Introduction to Accounting

ASSIGNMENT 1

Prepared for:
Lecturer’s name: Ms. Najwatun Najah bt Ahmad Supian

Prepared by:
Student’s Name: – ID No:
Contents
Introduction of the company........................................................................................................1
Content / calculation..................................................................................................................1
Comparison of two years’ ratio analysis and the interpretation...............................................1
Liquidity Ratio...........................................................................................................................2
a) Current ratio:..................................................................................................................2
b) Quick ratio:......................................................................................................................2
Activity ratio...............................................................................................................................2
a) Receivables turnover:.....................................................................................................2
b) Payables turnover:..........................................................................................................3
c) Inventory turnover ratio:...............................................................................................3
Profitability ratio........................................................................................................................3
Debt ratio....................................................................................................................................3
Conclusion...................................................................................................................................3
Suggestions..................................................................................................................................3
Reference.........................................................................................................................................4
Appendices......................................................................................................................................5
 Walmart

Introduction of the company

Walmart Inc. ("Walmart," the "Company" or "we") helps people around the world save money
and live better – anytime and anywhere – by providing the opportunity to shop in retail stores
and through eCommerce. Through innovation, we strive to continuously improve a customer-
centric experience that seamlessly integrates our eCommerce and retail stores in an omni-
channel offering that saves time for our customers. Each week, we serve nearly 275 million
customers who visit our more than 11,300 stores and numerous eCommerce websites under 58
banners in 27 countries.
Our strategy is to make every day easier for busy families, operate with discipline, sharpen our
culture and become digital, and make trust a competitive advantage. Making life easier for busy
families includes our commitment to price leadership, which has been and will remain a
cornerstone of our business, as well as increasing convenience to save our customers time. By
leading on price, we earn the trust of our customers every day by providing a broad assortment of
quality merchandise and services at everyday low prices ("EDLP"). EDLP is our pricing
philosophy under which we price items at a low price every day so our customers trust that our
prices will not change under frequent promotional activity. Everyday low cost ("EDLC") is our
commitment to control expenses so our cost savings can be passed along to our customers.
Our operations comprise three reportable segments: Walmart U.S., Walmart International and
Sam's Club. Our fiscal year ends on January 31 for our United States ("U.S.") and Canadian
operations. We consolidate all other operations generally using a one-month lag and on a
calendar year basis. Our discussion is as of and for the fiscal years ended January 31, 2019
("fiscal 2019"), January 31, 2018 ("fiscal 2018") and January 31, 2017 ("fiscal 2017"). During
fiscal 2019, we generated total revenues of $514.4 billion, which was primarily comprised of net
sales of $510.3 billion.
We maintain our principal offices at 702 S.W. 8th Street, Bentonville, Arkansas 72716, USA.
Our common stock trades on the
New York Stock Exchange under the symbol "WMT."

Content / calculation
Comparison of two years’ ratio analysis and the interpretation
2018 2019
$ ‘million $ ‘million
1) Liquidity ratio

61,897 59,664
 Current ratio
77,477 78,521
= 0.8:1 = 0.8:1
 61897-44,269 59,664-43,783
 Quick Ratio 77,477 78,521
= 0.2:1 = 0.2:1
1) Activity ratio
 Receivables 514,405 500,343
turnover ratio 6,283 5,614
= 82 times = 56.4 times

 Payables 385,301 373,396

turnover ratio 47,060 46,092
= 8:1 times = 8:1

 Inventory
turnover ratio 385,301 373,396
47,060 43,783
= 8:1 = 9:1
2) Profitability ratio
 Profit margin 21,957 X 100 20,437 X 100
ratio 514,405 500,343
= 4% = 4%
3) Return on Assets
 Debt ratio 43,520 X 100 30,045 X 100
79,634 80,822
= 50% = 40%

Liquidity Ratio
a) Current ratio:
The current ratio 0.8:1 which is a bit good but not good enough. A good current ratio
should at least be above 1 which indicates that the current assets can cover for the entire
current liabilities when due.
b) Quick ratio:
Maintained by Walmart is not exactly a good one. A good quick ratio should be above
1:1 which is significantly far from there 0.2:1 that walmart maintains.
Activity ratio
a) Receivables turnover:
A healthy receivables turnover ratio of 82 times and 89 times has been held by Walmart
for the two years in comparison respectively.
 b) Payables turnover:
Again Walmart appears to be creditworthy as its accounts reflects a high ratio of 8:1 for
its payables turnover.
c) Inventory turnover ratio:
Records of Walmart reflects an impressive turnover on inventories. The 9:1 ratio shows
how quickly Inventories are turned into sales.
Profitability ratio
Despite the impressive inventory turnover ratio, walmart does not seem to enjoy a high
profit margin ratio. The 4% profit margin reflected in the books suggests that Walmart
might be selling products at lower price to achieve high inventory turnover.
Debt ratio
The 4% debt ratio showed by the books of Walmart is impressive though there was a
10% decrease from the previous period. This decrease suggests that Walmart might have
enjoyed a higher level of leverage compared to the previous period.
Conclusion
Over the periods Walmart Incorporated has maintained good financial ratios do the profitability
ratios can still be improved upon. This is especially because no significant growth was recorded
from 2018 to 2019.
 Reference
Accounting Verse, Managerial Accounting, Viewed 25 July 2020
https://www.accountingverse.com/managerial-accounting/fs-analysis/debt-ratio.html

Corporate finance institute, Debt to asset Ratio, viewed 24 July 2020,

https://corporatefinanceinstitute.com/resources/knowledge/finance/debt-to-asset-ratio/

Nav, Profitability ratios types of profitability Ratios, viewed 27 July 2020,

https://www.nav.com/blog/profitability-ratios-types-of-profitability-ratios-444161/

Edward Lowe, How to Analyze Profitability, Viewed 24 July 2020,

https://edwardlowe.org/how-to-analyze-profitability-2/

Wall Street Mojo, Profitability Ratios Formula, Viewed 26 July 2020,

https://www.wallstreetmojo.com/profitability-ratios-formula/

Clear Tax, Liquidity Ratio, viewed 25 July 2020,

https://cleartax.in/s/liquidity-ratio
 Appendices
Ratio Analysis Formulas
Liquidity Ratio
Current Ratio = Current assets / Current liability
Quick Ratio = Current assets - Inventory / Current Liabilities
Activity Ratios
Receivables turnover Ratio = Revenue / receivables
Payable Turnover Ratio = Purchases or cost of Sales / Payable
Inventory Turnover = Cost of Sales / Inventory
Profitability Ratio
(Operating Profit x 100) / Sales
Return on Assets Ratio
Debt Ratio = (Long term debt x Equity) / 100

2018 2019
$ ‘million $ ‘million
2018 2019
$ ‘million $ ‘million
2) Liquidity ratio

61,897 59,664
 Current ratio
77,477 78,521
= 0.8:1 = 0.8:1

61897-44,269 59,664-43,783
 Quick Ratio 77,477 78,521
= 0.2:1 = 0.2:1
4) Activity ratio
 Receivables 514,405 500,343
turnover ratio 6,283 5,614
= 82 times = 56.4 times

 Payables 385,301 373,396

turnover ratio 47,060 46,092
 = 8:1 times = 8:1

 Inventory
turnover ratio 385,301 373,396
47,060 43,783
= 8:1 = 9:1
5) Profitability ratio
 Profit margin 21,957 X 100 20,437 X 100
ratio 514,405 500,343
= 4% = 4%
6) Return on Assets
 Debt ratio 43,520 X 100 30,045 X 100
79,634 80,822
= 50% = 40%