# Industry Averages

Submitted By ajsmom08
Words 537
Pages 3
Walmart is classified as a department store by the Department of Labor, with the Standard Industrial Classification (SIC) code of 5133. The Department of Labor website states, "…these stores must carry men's and women's apparel and either major household appliances or other home furnishings. These and other merchandise lines are normally arranged in separate sections or departments with the accounting on a departmentalized basis” (United States Department of Labor, 2014, para. 1.). The paper will examine Walmart and other industry department stores according to financial reportings, the Dun and Bradstreet Key Business ratios report, and calculations of financial ratios.
Team Calculations
Solvency Ratio
Solvency ratio = (After Tax Net Profit + Depreciation) / Total liabilities
2013
16,999,000+ 8,478,000/ 126,243,000=
25,477,000/ 126,243,000=20%
2012
15,699,000 + 8,106,000/121,687,000
23,805,000/121,687,000=20%
Profitability Ratio
Return on Sales=Net Income /Net Sales
2013
16,999,000/116,354,000=15%
2012
15,699,000/111,516,000=14%
Efficiency Ratio
Fixed Asset Turnover Ratio=Net Assets/Net Sales
2013
55,846,000/116,354,000=48%
2012
50,664,000/111,516,000=45%
Analysis
When comparing the calculated financial ratios for Walmart for 2012 and 2013 to that of the industry averages in solvency, Walmart was steady at 20% in 2012 and 2013 while the median numbers in 2012 and 2013 respectively for the industry were 64.30 and 46.20 (Dun and Bradstreet, 2014, para. 1). If this number is accurate, it is not a good indicator for how Walmart is handling cash flow. Walmart’s calculated return on sales, or profitability ratio was 14% in 2012 and 15% in 2013, but the median industry average in those respective years according to Dun and Bradstreet were 3.2 and 2.3 (Dun and Bradstreet, 2014, para. 3). There could be a fault in the calculation numbers because it...

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