Accounting (walmart) slp module 3 Essay Example | Topics and Well Written Essays - 500 words

Accounting (walmart) slp module 3 - Essay Example Amounts are in million. EBIT (earnings before interest and taxes); TCE (total capital employed). As could be realized, ROCE is impacted by capital turnover (sales/TCE) and operating profitability (EBIT/sales) which all settles down to ROCE being (EBIT/TCE). Thus, Wal-Mart took decisions which impacted their, capital turnover, making it to decrease every year, from 3.2 in 2004 to 2.84 in 2008. As for her operating profitability of sales, an increase was realized between 2004 and 2005, (5.81% to 6.08%) but it started declining in 2006 (6.0%) and in 2007 and 2008 it was 5.88% and 5.81% respectively. With this trend of events, Wal-Mart’s ROCE kept on declining as she employed more capital. Thus, the question now to answer is; due to the cost decisions taken in Wal-Mart, is her financial health improving or failing? Inventory rose every year but thanks to rising sales between 2004 to 2007, inventories appears to be under control. But this was not the case in 2008 whereby inventory increased with sales declining. But, how many times a year did Wal-Mart sell out her inventory? Here, Wal-Mart had a promising trend as the number keeps on increasing. Account receivables grew 61.7% between 2004 and 2008, which was faster than sales which only grew 31.7% between 2004 and 2008. Thus, money owed to Wal-Mart was increasing faster which was not a decision as her working capital is impacted