Based on your analysis and company research would you, as a bank-lending officer, approve a 5-year loan
Question:
Based on your analysis and company research would you, as a bank-lending officer, approve a 5-year loan for this company? If so, how much would you approve the loan for and for what purpose? Would you require security or collateral? Explain your reasoning.
Provide a recommendation as to whether an investor should buy, sell, or hold the stock of your company compared to the selected competitor. Your recommendation should be supported by an adequate explanation and reference to supporting analysis and ratios.
The company's I am covering are Walmart and Target, I will attach the data we came up with below, any help is greatly appreciated, thank you.
a. Return on Equity (Return on Owners’ Investment)
Walmart (Jan 2020)
Net IncomeAverage Total Stockholders' Equity=$14.88B81.55B*100%=19.08%
Target(Jan 2020)
$3.28B11.83B*100%=28.33%
b. Return on Assets (Return on Total Investment)
Walmart (Jan 2020)
Net IncomeAverage Total Assets=$14.88B236.5B*100%=6.29%
Target(Jan 2020)
$3.28B42.78B*100%=7.78%
c. Earnings per Share
Walmart (Jan 2020)
Net IncomeWeighted Average Number of Common Shares Outstanding=$14.88B2.868B=5.19
Target(Jan 2020)
$3.28B0.5156B=6.36
d. Net Profit Margin
Walmart (Jan 2020)
Net IncomeNet Sales Revenue=$14.88B523.96B*100%=2.84%
Target(Jan 2020)
$3.28B78.11B*100%=4.2%
e. Current Ratio
Walmart (Jan 2020)
Current AssetsCurrent Liabilities=$61.81B77.79B=0.79
Target(Jan 2020)
$12.902B14.487B=0.89
f. Quick Ratio
Walmart (Jan 2020)
$61.81B-44.44B77.79B=0.22
Target(Jan 2020)
$(12.902-8.992)B14.487B=0.27
g. Accounts Receivable Turnover
Walmart (Jan 2020)
Net Credit Sales Average Net Receivables=83.38
Target(Jan 2020)
81.2
h. Inventory Turnover
Walmart (Jan 2020)
Cost of Goods Sold Average Inventory=$394.61B(44.27+44.44)B/2=8.9
Target(Jan 2020)
$54.86B(9.497-8.992)B/2=5.93
i. Times interest earned
Walmart (Jan 2020)
Net Income + Interest Expense + Income Tax Expense Interest Expense=$21.468B2.599B=8.3
Target(Jan 2020)
$=$21.468B2.599B=8.3
j. Debt to Equity ratio
Walmart (Jan 2020)
Long term debts Shareholder Equity=$81,957M74,699M= 1.92
Target(Jan 2020)
$12.49B13.32B=0.94
k. Price/Earnings (P/E) ratio (Use the market price as of the balance sheet date).
Walmart (Jan 2020)
Share PriceEarnings per share=$138.75M6.92M= 20.05
Target(Jan 2020)
$104.200 M6.399 M=16.92
Expert Answer:
1 As a banklending officer I will focus on JJs Johnson and Johnson credit related ratios also known ... View the full answer
