Financial Performance Paper

The information included in this paper will illustrate Wal-Mart and Target’s history, products and services, and annual reports. These reports are intended to provide investors, creditors, and shareholders a glimpse into the financial successes and challenges a company goes through in a given year. Team C will use financial ratios to compare and analyze data from Wal-Mart and Target’s balance sheet, income statement, and statement of cash flow. The paper will also highlight internal events that affect the company’s cash position including cash generated by operating, financing, and investing activities.

Quick Ratio

Based on information taken from both Wal-Mart and Target financial statements, which can be located on their websites, a quick ratio was performed to measure the liquidity of both the companies. The quick ratio measures the liquidity of a company by performing a Wal-Mart the result showed 1.02 compared to targets 1.53 ("Wal-Mart’s Financial Center"). The quick ratio is used to measure the short term liquidity of a company. It is a measure in the ability of a company to pay its current liabilities based on available cash, short term investments, and receivables. The quick ratio showed higher in Target Stores even although Wal-Mart is a much larger and successful corporation ("Target Stores").

The annual reports of Wal-Mart and Target are provided free of charge via walmart.com and target.com. Upon inspection, the Wal-Mart and target reports include meaningful financial statements, including the Statement of Owners Equity, Income Statement, and Balance Sheet. These statements were obtained through 10-K statements available on walmart.com and target.com.

In comparing the statements of these companies, Wal-Mart and Target both provide multi-step Statements of Operations. According to About.com (2007) “The Quick Test Ratio (also called the Acid Test or Liquidity Ratio) is the most excessive and difficult test of a company's financial strength...