Recently, it was announced that two giant French retailers, Carrefour SA and Promodes SA, would merge. A headline in the Wall Street Journal blared, “French Retailers Create New Wal-Mart Rival.” While Wal-Mart’s total sales would still exceed those of the combined company, Wal-Mart’s international sales are far less than those of the combined company. This is a serious concern for Wal-Mart, since its primary opportunity for future growth lies outside of the United States. Below are basic financial data for the combined corporation (in euros) and Wal-Mart (in U.S. dollars) in a recent year. Even though their results are presented in different currencies, by employing ratios we can make some basic comparisons.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
Practice Pack

Recently, it was announced that two giant French retailers, Carrefour SA and Promodes SA, would merge. A headline in the Wall Street Journal blared, “French Retailers Create New Wal-Mart Rival.” While Wal-Mart’s total sales would still exceed those of the combined company, Wal-Mart’s international sales are far less than those of the combined company. This is a serious concern for Wal-Mart, since its primary opportunity for future growth lies outside of the United States.

Below are basic financial data for the combined corporation (in euros) and Wal-Mart (in U.S. dollars) in a recent year. Even though their results are presented in different currencies, by employing ratios we can make some basic comparisons.

Carrefour
Wal-Mart
(in millions)
(in millions)
Sales revenue
€70,486
$256,329
Cost of goods sold
54,630
198,747
Net income
1,738
9,054
Total assets
39,063
104,912
Current assets
14,521
34,421
Current liabilities
13,660
37,418
Total liabilities
29,434
61,289
Compare the two companies by answering the following.
Calculate the gross profit rate for each of the companies. (Round answers to 1 decimal places, e.g. 15.2%.)
Gross profit rate
Carrefour
%
Wal-Mart
Transcribed Image Text:Carrefour Wal-Mart (in millions) (in millions) Sales revenue €70,486 $256,329 Cost of goods sold 54,630 198,747 Net income 1,738 9,054 Total assets 39,063 104,912 Current assets 14,521 34,421 Current liabilities 13,660 37,418 Total liabilities 29,434 61,289 Compare the two companies by answering the following. Calculate the gross profit rate for each of the companies. (Round answers to 1 decimal places, e.g. 15.2%.) Gross profit rate Carrefour % Wal-Mart
Calculate the profit margin. (Round answers to 1 decimal places, e.g. 15.2%.)
Profit margin
Carrefour
Wal-Mart
Calculate the current ratio and debt to assets ratios for the two companies. (Round answers to 2 decimal places, e.g. 15.21 or
15.21:1.)
Current ratio
Debt to assets ratio
Carrefour
:1
Wal-Mart
:1
Transcribed Image Text:Calculate the profit margin. (Round answers to 1 decimal places, e.g. 15.2%.) Profit margin Carrefour Wal-Mart Calculate the current ratio and debt to assets ratios for the two companies. (Round answers to 2 decimal places, e.g. 15.21 or 15.21:1.) Current ratio Debt to assets ratio Carrefour :1 Wal-Mart :1
Expert Solution
trending now

Trending now

This is a popular solution!

video

Learn your way

Includes step-by-step video

steps

Step by step

Solved in 4 steps

Blurred answer
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education