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Finace/370 Week 2

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Submitted By martha2057
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Walmart Averages and Financial Ratios Team Paper
There are many publicly traded companies on YAHOO!® Finance, and Walmart (WMT) is one of the most well-known stores nationwide, and has a vast amount of public information readily available to the consumer. Walmart is a major retail chain identified with SIC code 5999-Miscellaneous Retail Store because it has such a large assortment of products. Assuming that the inventory ratio of Walmart (WMT) is based on a traditional inventory system, and that the globalized market and the supply chain make it critical to adopt lean principles to create a more efficient system we will discuss how a change in the Just in Time inventory system will affect Walmart (WMT).
Just In Time Inventory A just-in-time (JIT) inventory system is based on the idea that keeping a large on-hand inventory of any kind is a form of waste. JIT inventory management is an integral part of the lean model, which deals with eliminating wasted resources, energy, time and money in the manufacturing process. The ideal goal of JIT manufacturing is to have precisely the right amount of components or materials on hand at any given moment, with as little idle inventory as possible. Traditional inventory systems, on the other hand, seek to have enough inventories on hand so that production may continue even in the face of unexpected shortages or shipping delays (E How). If Walmart were operating on a traditional inventory system, and switched to a Just in Time Inventory it would eliminate any and all of their excess stock of goods. It would also free up unused storage space.
In order to calculate the solvency, profitability, and efficiency ratios for Walmart a close look into their finances is necessary. Profitability is sales divided by net income which is 27.57% in 2012, and up slightly in 2013 at 29.73%. The solvency ratio equals net income + depreciation

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