Current ratio 2007 2006 2005 Current Assets (USS M) 47585 46588 43824 WalMart Current Liabilities (US$M) 58454 51754 48826 Current Ratio 0.81 0.90 0.90 Current Assets (USS M) 21776 20502 19880 Dell Current Liabilities (US$M) 18187 17369 18526 Current Ratio 1.20 1.18 1.07 Current Assets (USS M) 7322 7918 10377 Medtronic Current Liabilities (US$M) 3535 2563 4406 Current Ratio 2.07 3.09 2.36 15
15 A1 Current Ratio 2007 2006 2005 WalMart Current Assets (US$ M) 47585 46588 43824 Current Liabilities (US$ M) 58454 51754 48826 Current Ratio 0.81 0.90 0.90 Dell Current Assets (US$ M) 21776 20502 19880 Current Liabilities (US$ M) 18187 17369 18526 Current Ratio 1.20 1.18 1.07 Medtronic Current Assets (US$ M) 7322 7918 10377 Current Liabilities (US$ M) 3535 2563 4406 Current Ratio 2.07 3.09 2.36
Current ratio Helps assess the company's ability to pay its debts in the near future Current Assets Current Ratio Current Liabilities Current Ratio 3.50 3.00 2.50 2.00 1,50 1.00 0.50 0.00 2007 2006 2005 Year ▣Walmart▣Del1▣Medtronic 16
16 Current Ratio Helps assess the company’s ability to pay its debts in the near future A1
Computing Leverage Ratios Total Debt Ratio =(TA-TE)/TA (5,862,989-2,984,513)/5,862,989=.491 times0r 49.1% The firm finances slightly over 49%of their assets with debt. o Debt/Equity TD/TE (5,862,989-2,984,513)/2,984,513=.964 times Equity Multiplier TA/TE 1 D/E ▣1+.964=1.964 17
17 Computing Leverage Ratios n Total Debt Ratio = (TA – TE) / TA q (5,862,989 – 2,984,513) / 5,862,989 = .491 times or 49.1% q The firm finances slightly over 49% of their assets with debt. n Debt/Equity = TD / TE q (5,862,989 – 2,984,513) / 2,984,513 = .964 times n Equity Multiplier = TA / TE = 1 + D/E q 1 + .964 = 1.964