CASE STUDY Research Paper Example | Topics and Well Written Essays - 1250 words

CASE STUDY - Research Paper Example Each dimension separately assesses and evaluates the financial performance and financial position of the company. And the purpose of this assessment is to decide whether the shares of this company should be purchased based on its current performance which is reflected by these ratios provided below. The company profitability is constantly deteriorating. The graph 01, which highlights the return on equity, demonstrates that the company has experienced a decrease of more than 1 per cent since 2012, highlighting that the financial and operational performance are not generating results for the company and it is becoming very challenging for the current management to increase return on equity. Similarly, return on assets has also fallen from 8.11 to 7.83 in 2014. In other words, the company management is not utilizing their assets in way to increase their productivity and their performance as well. At the same time, the figure 03, which displays return on sales, also highlights decreasing trend for sales over the mentioned period. This also validates that the company is not using its current and fixed assets in a way to increase their sales over these years instead the profitability ratios highlight that the company management is struggling to retain its financial position and perfo rmance instead of focusing on those strategies which increase the potential of the company to experience rise in the sales. Leverage ratios highlight that the company uses more debt for financing its business requirements. For example, debt to equity ratio demonstrates that the company has been substantially leveraged over these years. In the year of 2012, 2013, 2014, 1.55, 1.48, 1.51 debt to equity ratio has been respectively recorded by the company. As a result, it can be deduced that the real owners of Wal-Mart, who are shareholders, will not be given enough and attractive returns and