Ethics and Compliance of Walmart

Ethics and Compliance of Wal-Mart Stores

Financial Performance

The calculation for assessing the financial performance of Wal-Mart organization is to arbitrate the profitability of the business, estimate the risk, determine the rate of return on the capital investments, and stakeholders return on investment. According to University of Phoenix Evaluating a Firm's Financial Performance (2011), financial ratios analyze the financial strengths and weaknesses of the organizations. Ratios explore data over a period and analyze trends. This knowledge is to compare figures to the organizations competition.

Financial Ratios

Current Ratio

The current ratio of Wal-Mart's organization demonstrates the liquidity of the organization. The current ratio measures by dividing current assets (Keown, Martin, & Titman, 2010). In 2010 current assets were $48,032 million into current liabilities of $55,543 million. The current ratio of 2011 was $51,893 million and $58,484 million in current liabilities. Thus, giving Wal-Mart an -89% in current ratios.

In 2010 and 2011 Wal-Mart had a negative ratio in current assets. This would imply for every dollar in current liabilities Wal-Mart had a negative working capital (yahoo. finance, 2012). The formula is shown as:

Current ratio = Current assets/current liabilities (expressed in millions) (Keown, Martin, & Titman, 2010)

Current Ratio 2010 = $48,032/$55,543 = 0.864 = 86%

Current Ratio 2011 = $51,893/$58,484 = 0.887 = 89%

Debt Ratio

In accordance to Investopedia (2011), debt ratio can aid investors to arbitrate the organization's level of risk (Debt Ratio, Para 1). Deciding the debt ratio for Wal-Mart is determine by dividing total debt into total assets. The debt ratio in 2010 was 58.5% and in 2011 the debt ratio was 61.8%. The formula is shown as:

Debt ratio = total debt/total assets (Keown, Martin, & Titman, 2010)

Total debt = total liabilities and equity - total equity

Debt ratio 2010 = $99,632/$170,407 = .585 = 58.5%

Total debt 2010 = $170,407-$70,648 = $99,759

Debt ratio 2011 = $111,713/$180,663 = .618 = 61.8%

Total debt 2011 = $180,663-$68,542 = $112,121

Return on Equity

The return on equity is a measurement of an organization ability to use business equity to inaugurate profits. In the return on equity calculations the incorporated net income divided by common equity (Keown, Martin, & Titman, 2010). This show Wal-Mart's