Question

Financial ratios; Please compute and interpret the following financial ratios for Walmart: Quick ratio, debt to total asset ratio, TIE ratio, P/E ratio and M/B ratio for the years 2016 and 2017.

Answer 1

Data extracted from Financial reports of Walmart

Quick Ratio :

For 2016 Quick ratio=  (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities.

=(8,705,000+ 1,441,000+ 5,624,000 )/ 64,619,000 = 0.244046 = 24.4 %

For 2017 Quick Ratio = (6,867,000+ 1,941,000+ 5,835,000)/ 66,928,000 =  0.218787 = 21.878 %

Debt to Total Asset Ratio :

For2016 Debt/Total Asset =  119,035,000/ 199,581,000 = 0.596425

For 2017 Debt / Total Asset =  121,027,000/ 198,825,000 = 0.608711

TIE Ratio (Times Interest earned)

TIE= EBIT/ Total inerest payable on bonds and debt  

For 2016 TIE = 24,186,000/ 2,548,000 = 9.492151

For 2017 TIE= 22,864,000/ 2,367,000 = 9.659485

P/E Ratio = Price/ Earning per share =  = 1.03     for 2016     P/E = 0.98 FOR 2017