Short-term (Operating) Activity Analysis

Difficulty level: Basic


Ratios (Summary)

Wal-Mart Stores Inc., short-term (operating) activity ratios

 
Jan 31, 2015 Jan 31, 2014 Jan 31, 2013 Jan 31, 2012 Jan 31, 2011 Jan 31, 2010
Turnover Ratios
Inventory turnover 8.09 7.98 8.05 8.23 8.68 9.19
Receivables turnover 71.15 70.85 68.87 74.76 82.33 97.74
Payables turnover 9.50 9.57 9.26 9.15 9.40 10.00
Working capital turnover
Average No. of Days
Average inventory processing period 45 46 45 44 42 40
Add: Average receivable collection period 5 5 5 5 4 4
Operating cycle 50 51 50 49 46 44
Less: Average payables payment period 38 38 39 40 39 36
Cash conversion cycle 12 13 11 9 7 8

Source: Based on data from Wal-Mart Stores Inc. Annual Reports

Ratio Description The company
Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. Wal-Mart Stores Inc.'s inventory turnover deteriorated from 2013 to 2014 but then improved from 2014 to 2015 exceeding 2013 level.
Receivables turnover An activity ratio equal to revenue divided by receivables. Wal-Mart Stores Inc.'s receivables turnover improved from 2013 to 2014 and from 2014 to 2015.
Payables turnover An activity ratio calculated as cost of goods sold divided by payables. Wal-Mart Stores Inc.'s payables turnover increased from 2013 to 2014 but then slightly declined from 2014 to 2015.
Working capital turnover An activity ratio calculated as revenue divided by working capital.
Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period.
Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnoverd.
Operating cycle Equal to average inventory processing period plus average receivables collection period.
Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period.
Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period.

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Inventory Turnover

Wal-Mart Stores Inc., inventory turnover calculation, comparison to benchmarks

 
Jan 31, 2015 Jan 31, 2014 Jan 31, 2013 Jan 31, 2012 Jan 31, 2011 Jan 31, 2010
Selected Financial Data (USD $ in millions)
Cost of sales 365,086  358,069  352,488  335,127  315,287  304,657 
Inventories 45,141  44,858  43,803  40,714  36,318  33,160 
Ratio
Inventory turnover1 8.09 7.98 8.05 8.23 8.68 9.19
Benchmarks
Inventory Turnover, Competitors
Amazon.com Inc. 7.56 7.31 7.62 7.47 8.30
Target Corp. 5.83 5.84 6.40 6.04 6.02 6.14
Inventory Turnover, Sector
Broadline Retailers 7.62 7.73 7.85 8.14 8.62
Inventory Turnover, Industry
Consumer Services 8.31 8.31 8.43 8.40 8.35

Source: Based on data from Wal-Mart Stores Inc. Annual Reports

2015 Calculations

1 Inventory turnover = Cost of sales ÷ Inventories
= 365,086 ÷ 45,141 = 8.09

Ratio Description The company
Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. Wal-Mart Stores Inc.'s inventory turnover deteriorated from 2013 to 2014 but then improved from 2014 to 2015 exceeding 2013 level.

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Receivables Turnover

Wal-Mart Stores Inc., receivables turnover calculation, comparison to benchmarks

 
Jan 31, 2015 Jan 31, 2014 Jan 31, 2013 Jan 31, 2012 Jan 31, 2011 Jan 31, 2010
Selected Financial Data (USD $ in millions)
Net sales 482,229  473,076  466,114  443,854  418,952  405,046 
Receivables, net 6,778  6,677  6,768  5,937  5,089  4,144 
Ratio
Receivables turnover1 71.15 70.85 68.87 74.76 82.33 97.74
Benchmarks
Receivables Turnover, Competitors
Amazon.com Inc. 26.97 24.82 23.50 22.53 25.83
Target Corp. 11.55 10.69 9.11
Receivables Turnover, Sector
Broadline Retailers 63.61 62.71 39.64 39.83 40.43
Receivables Turnover, Industry
Consumer Services 20.67 21.83 20.68 20.77 21.87

Source: Based on data from Wal-Mart Stores Inc. Annual Reports

2015 Calculations

1 Receivables turnover = Net sales ÷ Receivables, net
= 482,229 ÷ 6,778 = 71.15

Ratio Description The company
Receivables turnover An activity ratio equal to revenue divided by receivables. Wal-Mart Stores Inc.'s receivables turnover improved from 2013 to 2014 and from 2014 to 2015.

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Payables Turnover

Wal-Mart Stores Inc., payables turnover calculation, comparison to benchmarks

 
Jan 31, 2015 Jan 31, 2014 Jan 31, 2013 Jan 31, 2012 Jan 31, 2011 Jan 31, 2010
Selected Financial Data (USD $ in millions)
Cost of sales 365,086  358,069  352,488  335,127  315,287  304,657 
Accounts payable 38,410  37,415  38,080  36,608  33,557  30,451 
Ratio
Payables turnover1 9.50 9.57 9.26 9.15 9.40 10.00
Benchmarks
Payables Turnover, Competitors
Amazon.com Inc. 3.81 3.58 3.45 3.35 3.30
Target Corp. 6.61 6.66 7.17 6.98 6.90 6.77
Payables Turnover, Sector
Broadline Retailers 7.67 7.59 7.55 7.76 8.34
Payables Turnover, Industry
Consumer Services 8.18 8.28 8.26 8.34 8.68

Source: Based on data from Wal-Mart Stores Inc. Annual Reports

2015 Calculations

1 Payables turnover = Cost of sales ÷ Accounts payable
= 365,086 ÷ 38,410 = 9.50

Ratio Description The company
Payables turnover An activity ratio calculated as cost of goods sold divided by payables. Wal-Mart Stores Inc.'s payables turnover increased from 2013 to 2014 but then slightly declined from 2014 to 2015.

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Working Capital Turnover

Wal-Mart Stores Inc., working capital turnover calculation, comparison to benchmarks

 
Jan 31, 2015 Jan 31, 2014 Jan 31, 2013 Jan 31, 2012 Jan 31, 2011 Jan 31, 2010
Selected Financial Data (USD $ in millions)
Current assets 63,278  61,185  59,940  54,975  51,893  48,331 
Less: Current liabilities 65,272  69,345  71,818  62,300  58,484  55,561 
Working capital (1,994) (8,160) (11,878) (7,325) (6,591) (7,230)
Net sales 482,229  473,076  466,114  443,854  418,952  405,046 
Ratio
Working capital turnover1
Benchmarks
Working Capital Turnover, Competitors
Amazon.com Inc. 27.48 45.26 26.63 18.53 10.13
Target Corp. 30.89 30.53 31.67 9.21 8.94
Working Capital Turnover, Sector
Broadline Retailers 169.36 155.05
Working Capital Turnover, Industry
Consumer Services 37.39 32.72 26.19 25.08 21.99

Source: Based on data from Wal-Mart Stores Inc. Annual Reports

2015 Calculations

1 Working capital turnover = Net sales ÷ Working capital
= 482,229 ÷ -1,994 = –

Ratio Description The company
Working capital turnover An activity ratio calculated as revenue divided by working capital.

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Average Inventory Processing Period

Wal-Mart Stores Inc., average inventory processing period calculation, comparison to benchmarks

 
Jan 31, 2015 Jan 31, 2014 Jan 31, 2013 Jan 31, 2012 Jan 31, 2011 Jan 31, 2010
Selected Financial Data
Inventory turnover 8.09 7.98 8.05 8.23 8.68 9.19
Ratio (no. of days)
Average inventory processing period1 45 46 45 44 42 40
Benchmarks (no. of days)
Average Inventory Processing Period, Competitors
Amazon.com Inc. 48 50 48 49 44
Target Corp. 63 63 57 60 61 59
Average Inventory Processing Period, Sector
Broadline Retailers 48 47 47 45 42
Average Inventory Processing Period, Industry
Consumer Services 44 44 43 43 44

Source: Based on data from Wal-Mart Stores Inc. Annual Reports

2015 Calculations

1 Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 8.09 = 45

Ratio Description The company
Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period.

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Average Receivable Collection Period

Wal-Mart Stores Inc., average receivable collection period calculation, comparison to benchmarks

 
Jan 31, 2015 Jan 31, 2014 Jan 31, 2013 Jan 31, 2012 Jan 31, 2011 Jan 31, 2010
Selected Financial Data
Receivables turnover 71.15 70.85 68.87 74.76 82.33 97.74
Ratio (no. of days)
Average receivable collection period1 5 5 5 5 4 4
Benchmarks (no. of days)
Average Receivable Collection Period, Competitors
Amazon.com Inc. 14 15 16 16 14
Target Corp. 32 34 40
Average Receivable Collection Period, Sector
Broadline Retailers 6 6 9 9 9
Average Receivable Collection Period, Industry
Consumer Services 18 17 18 18 17

Source: Based on data from Wal-Mart Stores Inc. Annual Reports

2015 Calculations

1 Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 71.15 = 5

Ratio Description The company
Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnoverd.

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Operating Cycle

Wal-Mart Stores Inc., operating cycle calculation, comparison to benchmarks

No. of days

 
Jan 31, 2015 Jan 31, 2014 Jan 31, 2013 Jan 31, 2012 Jan 31, 2011 Jan 31, 2010
Selected Financial Data
Average inventory processing period 45 46 45 44 42 40
Average receivable collection period 5 5 5 5 4 4
Ratio
Operating cycle1 50 51 50 49 46 44
Benchmarks
Operating Cycle, Competitors
Amazon.com Inc. 62 65 64 65 58
Target Corp. 92 95 99
Operating Cycle, Sector
Broadline Retailers 54 53 56 54 51
Operating Cycle, Industry
Consumer Services 62 61 61 61 61

Source: Based on data from Wal-Mart Stores Inc. Annual Reports

2015 Calculations

1 Operating cycle = Average inventory processing period + Average receivable collection period
= 45 + 5 = 50

Ratio Description The company
Operating cycle Equal to average inventory processing period plus average receivables collection period.

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Average Payables Payment Period

Wal-Mart Stores Inc., average payables payment period calculation, comparison to benchmarks

 
Jan 31, 2015 Jan 31, 2014 Jan 31, 2013 Jan 31, 2012 Jan 31, 2011 Jan 31, 2010
Selected Financial Data
Payables turnover 9.50 9.57 9.26 9.15 9.40 10.00
Ratio (no. of days)
Average payables payment period1 38 38 39 40 39 36
Benchmarks (no. of days)
Average Payables Payment Period, Competitors
Amazon.com Inc. 96 102 106 109 111
Target Corp. 55 55 51 52 53 54
Average Payables Payment Period, Sector
Broadline Retailers 48 48 48 47 44
Average Payables Payment Period, Industry
Consumer Services 45 44 44 44 42

Source: Based on data from Wal-Mart Stores Inc. Annual Reports

2015 Calculations

1 Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 9.50 = 38

Ratio Description The company
Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period.

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Cash Conversion Cycle

Wal-Mart Stores Inc., cash conversion cycle calculation, comparison to benchmarks

No. of days

 
Jan 31, 2015 Jan 31, 2014 Jan 31, 2013 Jan 31, 2012 Jan 31, 2011 Jan 31, 2010
Selected Financial Data
Average inventory processing period 45 46 45 44 42 40
Average receivable collection period 5 5 5 5 4 4
Average payables payment period 38 38 39 40 39 36
Ratio
Cash conversion cycle1 12 13 11 9 7 8
Benchmarks
Cash Conversion Cycle, Competitors
Amazon.com Inc. -34 -37 -42 -44 -53
Target Corp. 40 42 45
Cash Conversion Cycle, Sector
Broadline Retailers 6 5 8 7 7
Cash Conversion Cycle, Industry
Consumer Services 17 17 17 17 19

Source: Based on data from Wal-Mart Stores Inc. Annual Reports

2015 Calculations

1 Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 45 + 5 – 38 = 12

Ratio Description The company
Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period.

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