Assurance Exercise 1

Individual Case Analysis 1

Exercise 4A Step 1

1. Current Ratio 1.39

2. Quick Ratio 1.34

3. Debt to total assets ratio .359

4. Debt to Equity Ratio 76%

5. Long-term debt to equity ratio 76%

6. Times – Interest earned ratio 14.48

7. Inventory Turnover 0.15

8. Fixed Assets Turnover 4.71

9. Total Assets Turnover 28.46

10. Accounts Receivable Turnover 931,200

11. Average collection period 167

12. Gross profit margin 421%

13. Operating profit margin 27%

14. Net Profit margin 18%

15. Return on total assets (ROA) 151.55

16. Return on Stockholders Equity (ROE) 336.18

17. Earnings Per Share 431,320

18. Price Earnings Ratio 236%

19. Sales Ratio 103%

20. Net Income 180%

Case 6: 1-5

1. What are the major competitors’ strengths?

I would recommend that Mike Duke use the strategy of keeping prices low and having higher quality of merchandise. This would allow lower income families to acquire products at a lower cost. Having brand name products would also bring in more customers. Wal-Mart already has the slogan of lower everyday prices they could add”on name brand items”.

2. What are the major competitors’ weaknesses?

Wal-Mart could benefit more from internet retailing. There website has this option already. One would be able to purchase products online and have the product delivered to your home. If the delivery is to the tore then you could save the shipping costs. Having an internet retail site reduces overhead which in turn would lower the cost of the product.

3. What are the major competitors’ objectives and strategies?

I believe that Wal-Mart should open a few stores in Asia to see how well the stores produce a profit. If those stores produce profits then more stores should be added. Moving fast to open many stores may reduce the profit margins. If the new stores did not produce a profit then it is just a few stores and they could be shut down.

4. Should Wal-Mart...