1. Based upon the learning activities in Topic 1, you should now understand that positive working...

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1. Based upon the learning activities in Topic 1, you should now understand that positive working capital is normally a good thing in managing liquidity and profitability. Explain how Wal-Mart manages its working capital efficiently.
2. In addition, compare and contrast the working capital management strategy used by Wal-Mart with the working capital management strategy used by another big retailer such as Home Depot, Costco, Amazon, or Kroger.
3. So, how does Wal-Mart manage its cash, accounts receivables, inventory and accounts payable in a way that allows them to be more profitable than Costco? Hint: Calculate the cash conversion cycle for both Wal-Mart and Costco and then compare the components.

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Nitish Lath · Accepted Answer

Profitability and liquidity position analysis:
The current ratio of the Walmart Inc. is 0.97 times in year 2021 whereas in year 2020 the current ratio was 0.79 times. The quick ratio of the entity 0.26 times in year 2021 whereas in year 2020 was 0.20 times. Both the ratios shows that liquidity has been improved in year 2021 as compared to year 2020 but the liquidity management of the entity is not good and the working capital management is very poor. The return on assets is 5.53% in year 2021 which was higher in year 2020 i.e. 6.

1. Based upon the learning activities in Topic 1, you should now understand that positive working capital is normally a good thing in managing liquidity and profitability. Explain how Wal-Mart manages...

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