Attached you will find 2 posts by 2 different students. You need to respond to each separately with your opinion on what they wrote about (give them feedback) Also extend your discussion, whatever you would like to add to what they wrote about (make sure add references)
No wikipedia or blogs accepted
Darrick Mitchell
Week 7 Discussion
COLLAPSE
Whenever you want to find its current financial situation, you need to analyze its ratios to define its financial strengths and weaknesses. These financial ratios define the percentage of different assets on different things. Like Return on assets define how much return that assets provide. And debt to asset ratio defines how much a company owes to its creditors to how much a company has owned the assets; like in the case of Walmart, it shows an increasing trend, which means that its debt increases compared to its assets (Macrotrends, 2022).
|
|
2021 |
2020 |
2019 |
2018 |
2017 |
|
Return on Assets |
5.4282 |
6.4276 |
3.2737 |
5.1452 |
7.1887 |
|
Cash Return on Assets |
9.58% |
15.25% |
11.52% |
13.57% |
14.25% |
|
Return on Equity |
15.6585 |
18.6396 |
9.0150 |
13.0200 |
17.7470 |
|
Debt to Asset |
65.33% |
65.52% |
63.69% |
60.48% |
59.49% |
According to the financial analysis of Walmart, it’s proven that it didn’t show any progress in recent five years. Because the results of its financial ratios show fluctuations and they show a decreasing trend from 2017 to 2019. I believe that with the covid pandemic, its ratios are going to improve and show an increasing trend. In 2021 Walmart again shows a decreasing trend because debt is increased compared to its assets.
(ROA) assesses how effectively a corporation can extract income from its assets. Financial planners utilize a return on assets (ROA) to identify promising stock possibilities since the percentage indicates how efficiently a business uses its assets to create profits (Peters, 2012). This can also contribute to the effectiveness of the company’s strategic plan; like in the case of Walmart, its Return on asset is low in 2021 and only show an increasing trend in 2020. It means that its assets are not properly utilized, and there is some kind of loophole in their strategic plan that they need to find. A growing return on investment (ROI) over time suggests that a firm is doing a good job of improving its earnings with each investment dollar it spends on research and development (Peters, 2012). It can also impact its demand analysis because you can easily calculate how much profit or revenue they earn from its assets, including tangible or intangible assets. According to research, demand or sales of Walmart decreased in previous years except 2020. I believe that Walmart lack due to its online service, and people more shift on the Amazon website or other online service providers in the covid pandemic. They should focus on their online service and free delivery because it’s the requirement of the technology shift. Walmart has the strongest player in the industry, but they also need some aggressive marketing strategies to align with their overall strategic plan and improve its demand (Macrotrends, 2022).
References
Peters, D. A., & McKay, D. R. (2012). Are you Holt Renfrew or Walmart? Applied economics inpricing plastic surgery. The Canadian Journal of Plastic Surgery, 20(1), 51.
Walmart Financial Ratios for Analysis 2009-2021 | WMT. Macrotrends.net. (2022). Retrieved 23 February 2022, from https://www.macrotrends.net/stocks/charts/WMT/walmart/financial-ratios#google_vignette.
Student: Cleopatra Ashmeil
Hello everyone,
“Financial ratios are designed to extract important information that might not be obvious simply from examining a firm’s financial statements” (Brigham and Ehrhardt, 2019, pg. 103). Shah, Pitafi,
and Soomro (2019) posit that it is important to analyze the profitability of a firm as it tells how the firm is performing, it informs stockholders investment decisions, and helps creditors determine the ability
of the firm to repay debt. The profitability of a firm will determine its ability to put its strategic plans in motion because it takes money to implement these plans. Below are the financial ratios and analyses
of XPO Logistics, Inc for the years 2016 to 2020.
RETURN ON ASSETS RATIO
2020 2019 2018 2017 2016
$ Million $ Million $ Million $ Million $ Million
Net Income -13 241 444 360 85
Total Assets 16,169 14,128 12,270 12,602 11,698
ROA -0.80% 1.71% 3.62% 2.86% 7.27%
Industry Average 0.60% 1.60% -0.30% 0.90% 2%
According to the results of the five-year trend, ROA for XPO shows it has been higher than the industry average, indicating it has been effective in creating profit for the company from the use of its
assets. In 2020, however, the company suffered a loss, I would assume that was due to the Pandemic.
RETURN ON EQUITY RATIO
2020 2019 2018 2017 2016
$ Million $ Million $ Million $ Million $ Million
Net Income -13 241 444 360 85
Total Equity 2,849 2,896 3,970 4,010 3,038
ROE -0.46% 8.32% 11% 9% 2.80%
Industry Average 0% 10.20% -5.90% 4% 2.30%
ROE shows that for 2016 to 2018 the company’s ratio was higher than the industry’s, which means stockholders were profitable. However, for 2019 and 2020, XPO fell below the industry average,
suggesting a loss for stockholders.
DEBT TO ASSETS RATIO
2020 2019 2018 2017 2016
$ Million $ Million $ Million $ Million $ Million
Total Debt 5,240 5,182 3,902 4,418 4,732
Total Assets 16,169 14,128 12,270 12,602 11,698
DTA 0.33% 0.37% 0.32% 0.35% 0.40%
Debt-to-Assets Ratio shows a fluctuation for the five-year period which indicates that the company utilized less debts to finance its assets. For 2016, 40% of XPO’s debt was paid by creditors while
60% was paid by stockholders. For 2017 to 2020, less debt was paid by creditors. This means that investing in XPO Logistics would be minimal risk.
CASH RETURN ON ASSETS
2020 2019 2018 2017 2016
$ Million $ Million $ Million $ Million $ Million
Operational Cash Flow 388 629 1,102 785 622
Total Assets 16,169 14,128 12,270 12,602 11,698
CROA 0.24% 0.45% 0.90% 0.62% 0.53%
Cash Return on Assets shows a steady increase for 2016 to 2018 and a decline for 2019 and 2020.
I would suggest that XPO is in a good position to implement its strategic plans relative to continuous improvement on their technological innovations and to hire and retain additional employees who
will help to achieve the organization’s objectives of “moving the world forward.”
References
Brigham, E.F. and Ehrhardt, M.C. (2019). Financial Management Theory and Practice 16th edition Cengage Publishing
Shah, S.S., Pitafi, S.A., and Soomro, A. (2019). The nexus between capital structure and firms’ profitability: Evidence from oil and gas sector of Pakistan. 13(1), 109
https://0634km6rv-mp03-y-https-www-proquest-com.prx-keiser.lirn.net/docview/2286900419/9B8D91E2EE754B31PQ/1?accountid=35796
https://www.macrotrends.net/stocks/charts/XPO/xpo-logistics/financial-ratios
