# Interpreting Financial Statements

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INTERPRETING FINANCIAL STATEMENTS
Financial ratios can be defined as indicators of the performance of a company in a given period or comparing two or more periods and also comparing the performance of the company with competitors to evaluate the overall financial situation of both companies.
For this review we will compare two periods of Walmart Inc., and one period of Target to revise the financial performance of those two companies, the ratios are: Current ratio Walmart Target 2014 2013 2013 Current Assets 61,185,000 59,940,000 16,388,000 Current Liabilities 69,345,000 71,818,000 14,031,000 0.88 0.83 1.17
We can see that Walmart have current ratio below one meaning that all existing current assets will not be sufficient to pay off the current debt.
Target have a better ratio than Walmart it means they have 1.17 of current assets of every dollars to pay off their current liabilities. Quick ratio Walmart Target Current assets-inventory 16,327,000 16,137,000 8,485,000 Current liabilities 69,345,000 71,818,000 14,031,000 0.24 0.22 0.60
This ratio shows that Walmart have only 0.24 to pay every dollar of current debt, it means it does not include the inventory to pay off the current liabilities.
In this case the ratio is better than Walmart even though is not at least equals to 1 it is in better shape than Walmart having 0.60 compares to 0.22 in the year 2013. Inventory Turnover Walmart Target Cost of goods sold 358,069,000 352,297,000 50,568,000 Inventory 44,858,000 43,803,000 7,903,000 7.98 8.04 6.40
This ratio shows the numbers of times the inventory turned in a year calendar. In this case Walmart have a better position than Target showing a better ratio meaning that Walmart turns the inventory more times in a year. Days sales of inventory Walmart Target 365 days…...

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