mjs 99
docx
keyboard_arrow_up
School
University of Phoenix *
*We aren’t endorsed by this school
Course
571
Subject
Finance
Date
Feb 20, 2024
Type
docx
Pages
1
Uploaded by BailiffInternetRat32
Thanks for the good post, Mallory, and as you think about the company you are studying, would
it be better to use the ROA to analyze the company, or would ROE (the ratio we looked at in Week 2) be a better measure?
When analyzing a company like Walmart, both (ROA) and (ROE) can provide different insights that would
show the performance of the company, but they do show different aspects of Walmart’s financial health. ROA will measure how Walmart is utilizing the assets to create a profit. ROE will measure Walmart’s profitability relative to the shareholders equity. This method shows how much profit Walmart
generates with the money that the shareholders have invested. I believe ROA would be the better measure. Walmart relies heavily on asset infrastructure, such as stores, and inventory. ROE would be more appropriate to determine shareholder equity and returns. In order to determine the asset efficiency, ROE will be the best choice.
**Choosing Between ROA and ROE for Walmart:**
- If you want to assess how effectively Walmart is using its total asset base to generate profits, **ROA** would be a better measure. This is important because Walmart relies heavily on its extensive asset infrastructure, such as stores, distribution centers, and inventory, to drive its profitability.
- However, if you are more concerned about how well Walmart is utilizing shareholder equity to generate returns, then **ROE** would be more appropriate. This is particularly relevant if you are interested in understanding the profitability of Walmart from the perspective of its shareholders.
**Conclusion:**
Both ROA and ROE offer valuable insights into Walmart's financial performance, but the choice between them depends on the specific aspect of the company's performance you want to analyze—asset efficiency or shareholder returns.
Discover more documents: Sign up today!
Unlock a world of knowledge! Explore tailored content for a richer learning experience. Here's what you'll get:
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Related Documents
Related Questions
The senior management of ABC Corp. has proposed the following three performance measures for the company:
1. Net income as a percent of stockholders' equity
2. Revenue growth
3. Employee satisfaction
Management believes these three measures combine both financial and nonfinancial measures and, as such, are superior to using just financial measures. What advice would you give ABC Corp. for improving its performance measurement system?
arrow_forward
Required:
For each business analytics task, identify the correct step in the SOAR analytics model.
Business Analytics Task
STAN
Deciding which data to use in the analysis
Running a statistical analysis to evaluate the impact of advertising on sales of targeted products
Extracting data from blogs to analyze consumer sentiment regarding Verizon wireless service
Communicating current customers' key characteristics to management
Analyzing how profits will change if taxes on Chinese-sourced products increase in the coming year
Asking which vendor is most reliable based on past performance
SOAR Analytics Model Component
arrow_forward
You are a financial consultant. You are hired by a manufacturing company to assess its performance
Based on financial ratios. Your task is to come up with the following: (1) financial analysis using financial ratios
on liquidity, solvency or stability, and profitability; (2) trend analysis, both vertical and horizontal; and (3)
comparative financial statements. The analysis should be benchmarked with competitors.
Prepare a report indicating your comments on the financial health and performance of the company
(as benchmarked with competitors) using the following liquidity ratios: (1) current ratio, (2) receivable
turnover, (3) inventory turnover, and (4) quick ratio.
Give your insights into the relative solvency or stability of the company (as benchmarked with the
competitors) using the following ratios: (1) debt ratio, (2) times interest earned ratio, and (3) debt - equity
ratio,
Also, assess the relative profitability of the company (as benchmarked with competitors) using the…
arrow_forward
James Madison was brought in as assistant to Computron’s chairman, who had the task of getting the company back into a sound financial position. Madison must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions to take. Your assignment is to help her answer the following questions, using the recent and projected financial information shown next. Provide clear explanations, not yes or no answers.
Calculate the profit margin? operating profit margin? basic earning power (BEP)? return on assets (ROA)? and return on equity (ROE).
What can you say about these ratios?
arrow_forward
James Madison was brought in as assistant to Computron’s chairman, who had the task of getting the company back into a sound financial position. Madison must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions to take. Your assignment is to help her answer the following questions, using the recent and projected financial information shown next. Provide clear explanations, not yes or no answers.
Calculate the price/earnings ratio and market/book ratio.
Do these ratios indicate that investors are expected to have a high or low opinion of the company?
arrow_forward
Please don't used Ai solution
arrow_forward
Calculate materiality for the client, assuming that it is a profit-oriented company and moderate audit risk. Explain why you chose the base you did and why you chose the percentage. You may use guidelines from the textbook or the case study and should refer to the specific guidelines you used in your answer.
Current Year
Prior Year
Sales/revenue (net)
30,381,954
26,290,518
Expenses
7,263,786
6,519,376
Gross Margin
8,378,660
7,280,887
Pre-tax Income
1,114,873
761,510
Current Assets
18,993,546
16,966,273
Current Liabilities
8,221,991
6,810,164
Total Assets
19,679,541
17,670,625
arrow_forward
According to the textbook: Return on Equity (ROE) is a measure of how the stockholders fared during the year. Because benefiting shareholders is our goal, ROE is, in an accounting sense, the true bottom-line measure of performance. Breaking ROE into its constituent parts, by using the DuPont identity, identifies a firm’s operating efficiency, asset use, and financial leverage. However, these measures rely upon accounting data that may or may not be useful. Why would a firm have a negative ROE? Should investors buy stocks that have negative ROEs? What do you see as an alternative measure of how a firm benefits its shareholders?
arrow_forward
Create a financial statement for your hypothetical new business venture. Using the attached Excel template, and based on surveying a specific market place, make a best-guess estimated statement exhibiting profit and loss. In business, accuracy counts, so make sure to check and recheck your numbers before submitting your financial statements. Your grade will be based on the completeness and accuracy of the Income Statement.
This is all of the information that I have. The hypothetical business is for a residential moving company.
arrow_forward
Subject - account
Please help me.
Thankyou.
arrow_forward
James Madison was brought in as assistant to Computron’s chairman, who had the task of getting the company back into a sound financial position. Madison must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions to take. Your assignment is to help her answer the following questions, using the recent and projected financial information shown next. Provide clear explanations, not yes or no answers.
Why are ratios useful? What three groups use ratio analysis and for what reasons?
arrow_forward
Assuming that the fiscal health of the Health Company is not optimal, explain how Return on Equity (ROE) can help justify paying dividends to shareholders and increasing the company's debts.
If Liver Corporation has a lower price/earnings (P/E) ratio than another firm engaged in the same business, what reasons might explain these differences?
Describe at least three problems encountered in the analysis of financial indicators.
Explain how the DuPont equation can help in analyzing company results.
arrow_forward
Which of the following statements is true?
1. Financial measures such as ROI are generally better than nonfinancial measures of key success drivers such as customer satisfaction as lead
indicators of future financial performance.
II. The performance measures on a balanced scorecard tend to fall into four groups: financial measures, customer measures, internal business
process measures, and learning and growth measures.
III. Financial measures such as ROI and residual income as well as operating measures may be included in a balanced scorecard.
Multiple Choice
Both statements II and Ill are true.
None of the statements are true.
Both statements I and Ill are true.
All of the statements are true.
planning
arrow_forward
What are the ethical issues that Dunlap's management team mat have created by adopting a short run focus on financial performance for Sunbeam? What lessons could be learned from the outcome?
arrow_forward
How you analyze data and make decisions to improve your customer survey score. What is the impact of a high customer survey score on your financials?
arrow_forward
The publicly-traded company that you will use for your research paper is Apple Inc. You will research and monitor this company during the course. Your research should include all of the following :
Corporate Governance Analysis
Stockholder Analysis
Capital Structure Choices
Valuation – This is qualitative in nature. Research the previous annual reports to assist you with valuation. Sites, such as Yahoo Finance are also useful for these valuations.
Suggestions for Improving the Company in the Future
arrow_forward
For companies operating in the global marketspace, certain special decisions (make or buy also known as outsourcing, special order, or equipment purchasing decisions) can have both quantitative and qualitative considerations, which may or may not outweigh a favorable calculated outcome. Vetting each qualitative and quantitative matter takes time and resources, but it is necessary to make sure the company makes sound business decisions from both perspectives.
For this week’s discussion, consider one of the below three questions and respond to them with your initial posts.
Describe the reasons that a company may face a special order or outsourcing opportunity. How do they conduct a comprehensive cost analysis before trying to make a decision? What are the key cost components they should consider, and what criteria do they use to determine whether it's financially viable?
What risks are associated with accepting a special order or outsourcing, and how should a company evaluate and…
arrow_forward
Visit Yahoo Finance. Select a public company that has not been selected by another student in the discussion and look up the company’s stock’s performance over the last year. Discuss which company you selected and its performance.
What do you think are the market forces that might have influenced the value of the company’s stock at its peaks and valleys?
What do your findings indicate about your selected company’s financial health?
?
arrow_forward
SEE MORE QUESTIONS
Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Related Questions
- The senior management of ABC Corp. has proposed the following three performance measures for the company: 1. Net income as a percent of stockholders' equity 2. Revenue growth 3. Employee satisfaction Management believes these three measures combine both financial and nonfinancial measures and, as such, are superior to using just financial measures. What advice would you give ABC Corp. for improving its performance measurement system?arrow_forwardRequired: For each business analytics task, identify the correct step in the SOAR analytics model. Business Analytics Task STAN Deciding which data to use in the analysis Running a statistical analysis to evaluate the impact of advertising on sales of targeted products Extracting data from blogs to analyze consumer sentiment regarding Verizon wireless service Communicating current customers' key characteristics to management Analyzing how profits will change if taxes on Chinese-sourced products increase in the coming year Asking which vendor is most reliable based on past performance SOAR Analytics Model Componentarrow_forwardYou are a financial consultant. You are hired by a manufacturing company to assess its performance Based on financial ratios. Your task is to come up with the following: (1) financial analysis using financial ratios on liquidity, solvency or stability, and profitability; (2) trend analysis, both vertical and horizontal; and (3) comparative financial statements. The analysis should be benchmarked with competitors. Prepare a report indicating your comments on the financial health and performance of the company (as benchmarked with competitors) using the following liquidity ratios: (1) current ratio, (2) receivable turnover, (3) inventory turnover, and (4) quick ratio. Give your insights into the relative solvency or stability of the company (as benchmarked with the competitors) using the following ratios: (1) debt ratio, (2) times interest earned ratio, and (3) debt - equity ratio, Also, assess the relative profitability of the company (as benchmarked with competitors) using the…arrow_forward
- James Madison was brought in as assistant to Computron’s chairman, who had the task of getting the company back into a sound financial position. Madison must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions to take. Your assignment is to help her answer the following questions, using the recent and projected financial information shown next. Provide clear explanations, not yes or no answers. Calculate the profit margin? operating profit margin? basic earning power (BEP)? return on assets (ROA)? and return on equity (ROE). What can you say about these ratios?arrow_forwardJames Madison was brought in as assistant to Computron’s chairman, who had the task of getting the company back into a sound financial position. Madison must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions to take. Your assignment is to help her answer the following questions, using the recent and projected financial information shown next. Provide clear explanations, not yes or no answers. Calculate the price/earnings ratio and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company?arrow_forwardPlease don't used Ai solutionarrow_forward
- Calculate materiality for the client, assuming that it is a profit-oriented company and moderate audit risk. Explain why you chose the base you did and why you chose the percentage. You may use guidelines from the textbook or the case study and should refer to the specific guidelines you used in your answer. Current Year Prior Year Sales/revenue (net) 30,381,954 26,290,518 Expenses 7,263,786 6,519,376 Gross Margin 8,378,660 7,280,887 Pre-tax Income 1,114,873 761,510 Current Assets 18,993,546 16,966,273 Current Liabilities 8,221,991 6,810,164 Total Assets 19,679,541 17,670,625arrow_forwardAccording to the textbook: Return on Equity (ROE) is a measure of how the stockholders fared during the year. Because benefiting shareholders is our goal, ROE is, in an accounting sense, the true bottom-line measure of performance. Breaking ROE into its constituent parts, by using the DuPont identity, identifies a firm’s operating efficiency, asset use, and financial leverage. However, these measures rely upon accounting data that may or may not be useful. Why would a firm have a negative ROE? Should investors buy stocks that have negative ROEs? What do you see as an alternative measure of how a firm benefits its shareholders?arrow_forwardCreate a financial statement for your hypothetical new business venture. Using the attached Excel template, and based on surveying a specific market place, make a best-guess estimated statement exhibiting profit and loss. In business, accuracy counts, so make sure to check and recheck your numbers before submitting your financial statements. Your grade will be based on the completeness and accuracy of the Income Statement. This is all of the information that I have. The hypothetical business is for a residential moving company.arrow_forward
- Subject - account Please help me. Thankyou.arrow_forwardJames Madison was brought in as assistant to Computron’s chairman, who had the task of getting the company back into a sound financial position. Madison must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions to take. Your assignment is to help her answer the following questions, using the recent and projected financial information shown next. Provide clear explanations, not yes or no answers. Why are ratios useful? What three groups use ratio analysis and for what reasons?arrow_forwardAssuming that the fiscal health of the Health Company is not optimal, explain how Return on Equity (ROE) can help justify paying dividends to shareholders and increasing the company's debts. If Liver Corporation has a lower price/earnings (P/E) ratio than another firm engaged in the same business, what reasons might explain these differences? Describe at least three problems encountered in the analysis of financial indicators. Explain how the DuPont equation can help in analyzing company results.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT

EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT