1. Look at Walmart’s days sales outstanding (DSO) ratio overthe past ten years. Explain what DSO is and evaluate howWalmart’s management of debt collection has changed over thepast ten years.

2. The inventory turnover ratio tells you how efficiently a firm ismanaging its inventory. Suppose you want to compare the efficiencyof Walmart’s inventory management against TargetCorp’s (Ticker: TGT) inventory management. You can findTarget’s key financial ratios on Morningstar in the same way youfound Walmart’s financial ratios. Obtain the five-year averageturnover ratio for both companies. Which company appears to be moreefficient in managing its inventory? Explain your answer.

3. How does Walmart’s average ROA, ROE and ROIC over the last fiveyears compare to the stock market index1 provided byMorningstar? Explain your answer.

4. Recall the DuPont Equation2. Using the net margin, total assetturnover and financial leverage (which is the term Morningstar usesfor the equity multiplier) calculate your estimate ofWalmart’s return on equity (ROE) for 2021.Finally, let’s look atWalmart’s P/E ratio and compare against its competitors. To findthe P/E ratios of Walmart and its competitors, click on the“Stock Analysis” tab. Next click on the “Competitors” tab and goclick on the “More Competitors Data” dropdown.

5. Finally, let’s look at Walmart’s P/E ratio and compare againstits competitors. To find the P/E ratios of Walmart and itscompetitors, click on the “Stock Analysis” tab. Next click on the“Competitors” tab and go click on the “More Competitors Data”dropdown. Here you

   will be able to find P/E ratios for Walmartand three of its competitors. Create the benchmark P/Eratio for Walmart by taking the average of the competitor P/Eratios.

   Now compare Walmart’s P/E ratio to the benchmark P/Eratio; what can you say about Walmart’s growth prospects andriskiness relative to its competitors?

Answer rating: 100% (QA)

1 Days Sales Outstanding DSO Ratio and Walmarts Debt Collection Management DSO Explanation DSO measures the average number of days it takes a company to collect payment from its customers after a sale ... View the full answer