PROFITABILITY RATIOS

a) Rate of Return on Assets Return on Assets (ROA) = Net Income + Interest Expense (net of tax)

Avg Total Assets during period

Profit Margin for ROA = Net Income + Interest Expense (net of tax)Sales

Common Size Income Statement = Various Income statement itemssales

Total Asset Turnover Ratio = SalesAvg Total Assets during period

Accounts Receivable turnover Ratio = SalesAvg. A/R during period

Inventory Turnover Ratio = COGSAvg. Inventory during period

Fixed Asset Turnover Ratio = SalesAvg fixed assets during period

b) Rate of Return on Common Shareholder's EquityReturn on Common Equity (ROE) = Net Income - Preferred Dividend

Avg Common S.E. during period

Profit Margin for ROE = Net Income - Preferred DividendSales

Capital Structure Leverage Ratio = Average total assets during periodAvg Common S.E. during period

c) Earnings per Share of Common StockEPS of common stock = Net Income - Prefered Stock Dividends

number of common shares outstanding

Price-Earnings Ratio = Market Price per Share Earnings per Share

a) Liquity Current ratio = Current Assets

Current Liabilities

Quick ratio = Liquid Assetscurrent liabilities

b) Operating Cash Flow to Current Liabilities Cash Flow Operations to = Cash flow from operations

Current liabilities ratio Average Current Liabilities during period

c) Working Capital

RISK RATIOS (Short-term)

Accounts Payable Turnover ratio = PurchasesAvg A/P during period

Days Accounts receivable outstanding = 365 daysAccounts Receivable turnover Ratio

Days Inventories Held = 365 daysInventory Turnover Ratio

Days A/ P outstanding = 365 daysAccounts Receivable turnover Ratio

a) Debt RatiosLong-term Debt Ratio = Total Long Term Debt

Total Long Term Debt + Shareholders equity

Debt-Equity Ratio = Total LiabilitiesTotal Liabilities + Shareholders equity

b) Cash Flow from Operations to total liabilities ratioCash Flow Operations to = Cash flow from operations

Total liabilities ratio Avg Total Liabilities during period

b) Interest Coverage Interest Coverage Ratio (TIE) = EBIT

interest expense

RISK RATIOS (Long-term)

Net Profit: net income / net sales

sears Income statements In millions ($US), end Dec 31

REVENUES 1995 1996 1997 Merch. Sales revenues 31,133 33,751 36,371

Credit revenues 3,702 4,313 4,925

Total revenues 34,835 38,064 41,296

COSTS AND EXPENSES

COGS expenses (23,160) (24,889) (26,769)

Gross Profit (margin) 11,675 13,175 14,527

Selling and admin exp (7,428) (8,059) (8,331)

Provision for uncollectible accounts (589) (971) (1,532)

EBIT (operating profit) 3,658 4,145 4,664

depreciation expense (580) (697) (786)

interest expense (1,373) (1,365) (1,409)

reaffirmation charge - (475)

Operating Income 1,705 2,083 1,994

other income 23 22 106

EBT (before tax) 1,728 2,105 2,100

Income taxes (703) (834) (912)

Income from Continuing operations 1,025 1,271 1,188

Discontinued Operations 776 - -

Net Income 1,801 1,271 1,188

Retained Earnings Statements

1995 1996 1997

Retained Earnings Beg. - xxxxxx 3,330

Net Income 1,801 1,271 1,188

Dividends preferred - - -

Dividends common - #VALUE! (360)

Retained earnings end xxxxxx 3,330 4,158 Income Statements

Trend Horizontal

1995 1996 1997 TREND Merch. Sales revenues 1.00 1.08 1.17 Credit revenues 1.00 1.17 1.33

### Total revenues 1.00 1.09 1.19 COSTS AND EXPENSES COGS expenses 1.00 1.07 1.16 Gross Profit (margin) 1.00 1.13 1.24 Selling and admin exp 1.00 1.08 1.12 Provision for uncollectible accounts 1.00 1.65 2.60 EBIT (operating profit) 1.00 1.13 1.28 depreciation expense 1.00 1.20 1.36 interest expense 1.00 0.99 1.03 reaffirmation charge 4.75 Operating Income 1.00 1.22 1.17 other income 1.00 0.96 4.61 EBT (before tax) 1.00 1.22 1.22 Income taxes 1.00 1.19 1.30 Income from Continuing operations 1.00 1.24 1.16 Discontinued Operations 1.00 - - Net Income 1.00 0.71 0.66

###

###

TREND

Ratio Analysis 1995 1996 1997

tax rate = 39.6% 43.4%

Overall returns ROA (Return on Assets) 1.2% 1.0% very low margin, got even smaller ROE (Return on Equity) - 25.7% 22.0% benefited from leverage - ROE = Bigger than ROA = very good

Disaggregation of ROA Profit Margin for ROA (NI / Sales) - 1.3% 1.1% Total Assets Turnover (Sales / Avg TA) - 0.93 0.97

Disaggregation of ROE Proft Margin for ROE (NI / Sales) 3.8% 3.3% decreased slightly Total Assets Turnover (Sales / Avg TA) - 0.93 0.97 increased slightly Capital structure leverage (Avg (L + SE) / Avg SE) - 7.31 6.93 decreased leverage

Profitability ratios:

Common Size Income statements (% of sales) - Profitability ratios

1995 1996 1997 Merch. Sales revenues 100.0% 100.0% 100.0% Credit revenues 11.9% 12.8% 13.5% worse COGS expenses -74.4% -73.7% -73.6% better Gross Profit (margin) 37.5% 39.0% 39.9% better Selling and admin exp -23.9% -23.9% -22.9% better Provision for uncollectible accounts -1.9% -2.9% -4.2% worse EBIT (operating profit) 11.7% 12.3% 12.8% better depreciation expense -1.9% -2.1% -2.2% worse interest expense -4.4% -4.0% -3.9% better reaffirmation charge 0.0% 0.0% -1.3% Operating Income 5.5% 6.2% 5.5% up then down other income 0.1% 0.1% 0.3% EBT (before tax) 5.6% 6.2% 5.8% up then down Income taxes -2.3% -2.5% -2.5% Income from Continuing operations 3.3% 3.8% 3.3% up then down Discontinued Operations 2.5% 0.0% 0.0% Net Income 5.8% 3.8% 3.3% worse

######

Turnover Ratios: Total Assets Turnover (Sales / Avg TA) - 0.93 0.97 A/R turnover (Sales / Average A/R) 1.54 1.60

days AR outstanding (365 / AR turnover) 236.82 227.76 getting better Inventory turnover (COGS / Average inventory) 5.36 5.53

days to turn inventory avg. (365 / Inventory turnover) 68.13 66.06 getting better PPE turnover (Sales / Average PPE) 5.74 5.92

Leverage ratios:

Solvency ratios:Debt/equity (L/SE) 6.31 5.60 Debt/equity (L / L + SE) 0.86 0.85 Times interest earned (EBIT/Interest expense) 2.66 3.04 3.31 getting better

Liquidity ratios:Current ratio (CA / CL) 1.90 1.94 getting better Quick (acid-test) ratio ( (Cash + MS + AR) / CL) 1.51 1.51 Cash from Operations / current liabilities

Trend Common Size Balance Sheets (% of assets)

1995 1996 1997 Cash & equivalents 2% 1% worse Retained interest ccard receivables 6% 9% Credit card receivables 56% 54% less: uncollectibles -2% -3% Other receivables 1% 1% Inventory(merchandise) 13% 13% prepaid expenses & deferred charges 1% 2% deferred income taxes 2% 2% Total Current Assets 79% 79% Long term Assets 0% 0% Plant and Equipment 28% 29% accum depr. -12% -13% Total Non-Current Assets 16% 17% deferred income taxes 3% 2% other assets 3% 2% Total Assets 100% 100% -

Current Liabilities Short term borrowings 10% 13% increased Current portion of LT debt 8% 7% Accounts payable 20% 17% decreased Unearned revenues 2% 2% Other taxes 2% 1% Total current liabilities 41% 41% Long term debt 0% 0% Long term debt & capitalized lease obligations 34% 34% Postretirement benefits 8% 7% Minority interest and other liabilities 4% 4% Total long term Liabilities 45% 44% Total Liabilities 86% 85% Common Shares ($0.75 par) 1% 1% Capital in excess of par 10% 9% Retained Earnings 9% 11% Treasure stock at cost -5% -4% Minimum pension liability -1% -1%

Deferred ESOP expense -1% -1% Cumulative translation adjustments 0% 0% Total S.E. equity 14% 15% Total Liab + SE equity 100% 100%

sears Balance sheets In millions ($US), end Dec 31

1995 1996 1997 Assets: Current Assets

Cash & equivalents 660 660 358

Retained interest ccard receiv 2,260 2,260 3,316

Credit card receivables 20,104 20,104 20,956

less: allowance uncollectib (801) (801) (1,113)

Other receivables 335 335 335

Inventory(merchandise) 4,646 4,646 5,044

prepaid expenses & deferred 348 348 956

deferred income taxes 895 895 830

Total Current Assets 28,447 28,447 30,682

Long term Assets -

Plant and Equipment 10,237 10,237 11,324

accucmulated depr. (4,359) (4,359) (4,910)

Total Non-Current Assets 5,878 5,878 6,414

deferred income taxes 905 905 666

other assets 937 937 938

Total Assets 36,167 36,167 38,700

-

Equities: Current Liabilities -

Short term borrowings 3,533 3,533 5,208

Current portion of LT debt 2,737 2,737 2,561

Accounts payable 7,225 7,225 6,637

Unearned revenues 840 840 830

Other taxes 615 615 554

Total current liabilities 14,950 14,950 15,790

Long term debt -

Long term debt & capitalized l 12,170 12,170 13,071

Postretirement benefits 2,748 2,748 2,564

Minority interest and other liabi 1,354 1,354 1,413

Total long term Liabilities 16,272 16,272 17,048

Total Liabilities 31,222 31,222 32,838

Shareholders Equity -

Common Shares ($0.75 par) 323 323 323

Capital in excess of par 3,618 3,618 3,598

Retained Earnings xxxxxx 3,330 4,158

Treasure stock at cost (1,655) (1,655) (1,702)

Minimum pension liability (277) (277) (217)

Deferred ESOP expense (230) (230) (204)

Cumulative translation adjust (164) (164) (94)

Total S.E. equity 4,945 4,945 5,862

Total Liab + SE equity 36,167 36,167 38,700 Trend Horizontal

Balance sheets

1995 1996 1997 TREND Current Assets Cash & equivalents 1.00 0.54 DECREASED Retained interest ccard receivables 1.00 1.47 Credit card receivables 1.00 1.04 - 1.00 1.39 Other receivables 1.00 1.00 Inventory(merchandise) 1.00 1.09 prepaid expenses & deferred charges 1.00 2.75 deferred income taxes 1.00 0.93 Total Current Assets 1.00 1.08 Long term Assets Plant and Equipment 1.00 1.11 - 1.00 1.13 Total Non-Current Assets 1.00 1.09 deferred income taxes 1.00 0.74 other assets 1.00 1.00 Total Assets 1.00 1.07 - Current Liabilities Short term borrowings 1.00 1.47 Current portion of LT debt 1.00 0.94 Accounts payable 1.00 0.92 Unearned revenues 1.00 0.99 Other taxes 1.00 0.90 Total current liabilities 1.00 1.06 Long term debt Long term debt & capitalized lease obli 1.00 1.07 Postretirement benefits 1.00 0.93 Minority interest and other liabilities 1.00 1.04 Total long term Liabilities 1.00 1.05 Total Liabilities 1.00 1.05 Shareholders Equity Common Shares ($0.75 par) 1.00 1.00 Capital in excess of par 1.00 0.99 Retained Earnings 1.00 1.25 Treasure stock at cost 1.00 1.03 Minimum pension liability 1.00 0.78 Deferred ESOP expense 1.00 0.89 Cumulative translation adjustments 1.00 0.57 Total S.E. equity 1.00 1.19 Total Liab + SE equity 1.00 1.07

Level

very low margin, got even smaller benefited from leverage - ROE = Bigger than ROA = very good

decreased slightly increased slightly decreased leverage roe decreased because of decreased profit margin + decreased leverage, but increased because of faster asset turnover

COGS decreased as % of sales. Should have increased profitiblity

SG&A are down in comparison to sales. This should have increased the profit margin

up then down

up then down

up then down

probably would have been up then down, but 2006 skewed by discontinued operations

high Accounts receivables turn VERY slowly

high Inventory turnover is improving, but overall level seems high

danger The amount of leverage seems to be excessive. The safe range of 0.40-1.20. The trend, however, is in the right direction with 85% of total SE in debt, they seem to be overly leveraged, especially for a retailer

low this ratio should be over 7. The trend is good, however.

low The safe range for the current ratio is 2:1. In the short term, however, they should be capable of paying their short term debts ok A safe range would be more than 1.0, and with 1.5, they seem very able to pay for current liabilities

Level

Cash Flow statements 1995 1996 1997

Cash flow from operating activities

cash flow from investing activities

cash flow from financing activities

Net Change in Cash

Compared to sales

slower FASTER slower FASTER slower slower FASTER slower slower

slower slower slower slower slower slower

FASTER slower slower slower slower slower

slower slower slower slower slower

slower slower FASTER slower slower slower slower FASTER slower

roe decreased because of decreased profit margin + decreased leverage, but increased because of faster asset turnover

The amount of leverage seems to be excessive. The safe range of 0.40-1.20. The trend, however, is in the right direction

The safe range for the current ratio is 2:1. In the short term, however, they should be capable of paying their short term debts A safe range would be more than 1.0, and with 1.5, they seem very able to pay for current liabilities

Walmart Income statements In millions ($US), end JAN 31

REVENUES 1996 1997 1998 Merch. Sales revenues 93,627 104,859 117,958 Other income net 1,146 1,319 1,341

Total revenues 94,773 106,178 119,299 COSTS AND EXPENSES COGS expenses (74,505) (83,510) (93,438) Gross Profit (margin) 20,268 22,668 25,861 Selling and admin exp (15,021) (16,946) (19,358) Provision for uncollectible accounts EBIT (operating profit) 5,247 5,722 6,503 depreciation expense interest expense (888) (845) (784) reaffirmation charge - Operating Income 4,359 4,877 5,719 other income EBT (before tax) 4,359 4,877 5,719 Income taxes (1,606) (1,794) (2,115) Income from Continuing operations 2,753 3,083 3,604 Discontinued Operations - - Minority Interest & equity in unconsolidated subs (13) (27) (78) Net Income 2,740 3,056 3,526

Retained Earnings Statements 1996 1997 1998

Retained Earnings Beg. - xxxxxx 16,768 Net Income 2,740 3,056 3,526 Dividends preferred - - - Dividends common - #VALUE! (2,127)

Retained earnings end xxxxxx 16,768 18,167 Income Statements Trend Horizontal

1996 1997 1998 TREND Merch. Sales revenues 1.00 1.12 1.26

Other income net 1.00 1.15 1.17 ### Total revenues 1.00 1.12 1.26

COSTS AND EXPENSES COGS expenses 1.00 1.12 1.25 Gross Profit (margin) 1.00 1.12 1.28 Selling and admin exp 1.00 1.13 1.29 Provision for uncollectible accounts EBIT (operating profit) 1.00 1.09 1.24 depreciation expense interest expense 1.00 0.95 0.88 reaffirmation charge Operating Income 1.00 1.12 1.31 other income EBT (before tax) 1.00 1.12 1.31 Income taxes 1.00 1.12 1.32 Income from Continuing operations 1.00 1.12 1.31 Discontinued Operations Minority Interest & equity in unconsolidated subs 1.00 2.08 6.00 Net Income 1.00 1.12 1.29

######

###

TREND

Ratio Analysis 1996 1997 1998

tax rate = 36.8% 37.0%

Overall returns ROA (Return on Assets) 6.4% 7.1% trend is positi

ROE (Return on Equity) - 17.8% 19.8% positive

Disaggregation of ROA Profit Margin for ROA (NI / Sales) - 2.4% 2.6% Total Assets Turnover (Sales / Avg TA) - 2.65 2.78

Disaggregation of ROE Proft Margin for ROE (NI / Sales) 2.9% 3.0% increased Total Assets Turnover (Sales / Avg TA) - 2.65 2.78 increased Capital structure leverage (Avg (L + SE) / Avg SE) - 2.31 2.38 increased

Profitability ratios:

Common Size Income statements (% of sales) - Profitability ratios

1996 1997 1998 Merch. Sales revenues 100.0% 100.0% 100.0% Other income net 1.2% 1.3% 1.1%

### COSTS AND EXPENSES COGS expenses -79.6% -79.6% -79.2% Gross Profit (margin) 21.6% 21.6% 21.9% Selling and admin exp -16.0% -16.2% -16.4% Provision for uncollectible accounts EBIT (operating profit) 5.6% 5.5% 5.5% depreciation expense interest expense -0.9% -0.8% -0.7% reaffirmation charge Operating Income 4.7% 4.7% 4.8% other income EBT (before tax) 4.7% 4.7% 4.8% Income taxes -1.7% -1.7% -1.8% Income from Continuing operations 2.9% 2.9% 3.1% Discontinued Operations Minority Interest & equity in unconsolidated subs Net Income 2.9% 2.9% 3.0%

Turnover Ratios: Total Assets Turnover (Sales / Avg TA) - 2.65 2.78 A/R turnover (Sales / Average A/R) 124.09 129.55

days AR outstanding (365 / AR turnover) 2.94 2.82 improved Inventory turnover (COGS / Average inventory) 5.16 5.66

days to turn inventory avg. (365 / Inventory turnover) 70.78 64.53 improved PPE turnover (Sales / Average PPE) 5.72 5.93

Leverage ratios: Solvency ratios:Debt/equity (L/SE) 1.31 1.45 getting worseDebt/equity (L / L + SE) 0.57 0.59

Times interest earned (EBIT/Interest expense) 5.91 6.77 8.29 getting better

Liquidity ratios:Current ratio (CA / CL) 1.64 1.34 getting worseQuick (acid-test) ratio ( (Cash + MS + AR) / CL) 0.16 0.17 Cash from Operations / current liabilities

Trend Common Size Balance Sheets (% of assets)

1996 1997 1998 Cash & equivalents 2% 3% better Receivables 2% 2% Inventory(at replacement cost) 41% 37% less less LIFO reserve -1% -1% Inventories at LIFO cost 40% 36% less prepaid expenses & deferred charges 1% 1% Total Current Assets 45% 43% Long term Assets 0% 0% Plant and Equipment 59% 60% -

Net PPE 46% 47% Property under capital lease: 7% 7% -

Net Property under cap.lease 5% 5% other assets & deferred charges 3% 5% Total Assets 100% 100% -

Current Liabilities Accounts payable 19% 20% increased Accrued Liabilities 6% 8% increased Accrued Income taxes 1% 1% Long term debt due in 1 year 1% 2% Obligations under capital leases due in 1 year 0% 0% Total current liabilities 28% 32% increased Long term debt 0% 0% long term debt 19% 16% decreased long term obligations under capital leases 6% 5% deferred income taxes and other 1% 2% Minority interest 3% 4% Total long term Liabilities 29% 27% decreased Total Liabilities 57% 59% Shareholders Equity 0% 0% Common Shares ($0.10 par) 1% 0% Capital in excess of par 1% 1% Retained Earnings 42% 40% decreased Foreign Currency translation adjustment -1% -1% Total S.E. equity 43% 41% Total Liab + SE equity 100% 100%

-

Walmart Balance sheets In millions ($US), end JAN 31

1996 1997 1998 Assets: Current Assets

Cash & equivalents 883 883 1,447 Receivables 845 845 976 Inventory(at replacement cost) 16,193 16,193 16,845 less LIFO reserve (296) (348) Inventories at LIFO cost 15,897 16,497 prepaid expenses & deferred charges 368 368 432 Total Current Assets 17,993 17,993 19,352 Long term Assets Plant and Equipment 23,182 23,182 27,376

accucmulated depr. (4,849) (4,849) (5,907) Net PPE 18,333 18,333 21,469 Property under capital lease: 2,782 3,040

accucmulated depr. (791) (903) Net Property under cap.lease 1,991 2,137 other assets & deferred charges 1,287 1,287 2,426 Total Assets 39,604 39,604 45,384

Equities: Current Liabilities Accounts payable 298 7,628 9,126 Accrued Liabilities 2,413 2,413 3,628 Accrued Income taxes 298 565 Long term debt due in 1 year 523 523 1,039 Obligations under capital leases due in 1 ye 95 95 102 Total current liabilities 10,957 10,957 14,460 Long term debt long term debt 7,709 7,709 7,191 long term obligations under capital leases 2,307 2,307 2,483 deferred income taxes and other 463 463 809 Minority interest 1,025 1,025 1,938 Total long term Liabilities 11,504 11,504 12,421 Total Liabilities 22,461 22,461 26,881 Shareholders Equity Common Shares ($0.10 par) 228 228 224 Capital in excess of par 547 547 585 Retained Earnings xxxxxx 16,768 18,167 Foreign Currency translation adjustment (400) (400) (473) Total S.E. equity 17,143 17,143 18,503 Total Liab + SE equity 39,604 39,604 45,384

Trend Horizontal Balance sheets

1996 1997 1998 Current Assets

Cash & equivalents 1.00 1.64 Receivables 1.00 1.16 Inventory(at replacement cost) 1.00 1.04 less LIFO reserve 1.00 1.18 Inventories at LIFO cost 1.00 1.04 prepaid expenses & deferred charges 1.00 1.17 Total Current Assets 1.00 1.08 Long term Assets Plant and Equipment 1.00 1.18 - 1.00 1.22 Net PPE 1.00 1.17 Property under capital lease: 1.00 1.09 - 1.00 1.14 Net Property under cap.lease 1.00 1.07 other assets & deferred charges 1.00 1.89 Total Assets 1.00 1.15 - Current Liabilities Accounts payable 1.00 1.20 Accrued Liabilities 1.00 1.50 Accrued Income taxes 1.00 1.90 Long term debt due in 1 year 1.00 1.99 Obligations under capital leases due in 1 year 1.00 1.07 Total current liabilities 1.00 1.32 Long term debt long term debt 1.00 0.93 long term obligations under capital leases 1.00 1.08 deferred income taxes and other 1.00 1.75 Minority interest 1.00 1.89 Total long term Liabilities 1.00 1.08 Total Liabilities 1.00 1.20 Shareholders Equity Common Shares ($0.10 par) 1.00 0.98 Capital in excess of par 1.00 1.07 Retained Earnings 1.00 1.08 Foreign Currency translation adjustment 1.00 1.18 Total S.E. equity 1.00 1.08 Total Liab + SE equity 1.00 1.15

Level

level is acceptable

good

COGS decreased as % of sales. Should have increased profitiblity

SG&A are up a little comparison to sales.

up slightly

up slightly

low

high Inventory turnover is improving, but overall level seems high

danger slightly above safe range of 0.40-1.20.

ok this ratio should be over 7. The trend is good, however.

low The safe range for the current ratio is 2:1. In the short term, however, they should be capable of paying their short term debts low A safe range would be more than 1.0. They need to sell inventory to pay for short term liabilities

Level

Cash Flow statements 1996 1997 1998

Cash flow from operating activities

cash flow from investing activities

cash flow from financing activities

Net Change in Cash

TREND Compared to sales

FASTER slower slower slower slower slower slower slower slower

slower slower slower slower FASTER slower

slower FASTER FASTER FASTER slower FASTER

slower slower FASTER FASTER slower

slower slower slower slower slower slower slower

The safe range for the current ratio is 2:1. In the short term, however, they should be capable of paying their short term debts A safe range would be more than 1.0. They need to sell inventory to pay for short term liabilities

1997US$ Millions

sears WalmartTotal revenues $ 41,296 $ 106,178 Net Income $ 1,188 $ 3,056 ROA (Return on Assets) 1.04% 6.37%ROE (Return on Equity) 21.99% 17.83%

Disaggregation of ROEProft Margin for ROE (NI / Sales) 3.27% 2.91%Total Assets Turnover (Sales / Avg TA) 0.97 2.65 Capital structure leverage (Avg (L + SE) / Avg SE) 6.93 2.31

Disaggregation of Total Assets Turnover ratio A/R turnover (Sales / Average A/R) 1.60 124.09 days AR outstanding (365 / AR turnover) 227.76 2.94 Inventory turnover (COGS / Average inventory) 5.53 5.16 days to turn inventory avg. (365 / Inventory turnover) 66.06 70.78 PPE turnover (Sales / Average PPE) 5.92 5.72

Disaggregation of Capital Structure leverage ratio Solvency ratios:Debt/equity (L/SE) 5.60 1.31 Debt/equity (L / L + SE) 0.85 0.57 Times interest earned (EBIT/Interest expense) 3.31 6.77

Liquidity ratios:Current ratio (CA / CL) 1.94 1.64 Quick (acid-test) ratio ( (Cash + MS + AR) / CL) 1.51 0.16 Cash from Operations / current liabilities - -

comments

Net income over sales is approximately the same for both companiesdisconsidering the effect of leverage, Walmart is more profitableSears is much higher leveraged and is using the financial leverage to increase ROE

Walmart is much more efficient in generating sales out of their assetsSears has much higher % of leverage (more debt vs equity)

Walmart relies much less on credit sales than does Sears, and benefits by receiving cash quickerOn average, Sears waits almost 3/4 of a year to receive their cash from sales, but Walmart receives in 3 daysapprox. the sameapprox. the sameapprox. the same

Sears seems to have too much debt (leverage). The safe range of debt equity ratio is normally = 0.40-1.20.Sears has 85% of total SE in debt, they seem to be overly leveraged,Walmart is much "safer" by this measure. Rule of thumb is that TIE should be above 7:1

Sears current ratio is betterWalmarts Quick ratio seems too low. They will have to continue to sell inventory to pay for current liabilities

2.5711452.572391