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1、Survey of accounting mid-term testAnalysis of Carrefour and Wal-MartClass：_Number: _Name: _Time: _1History of Carrefour22Current Condition of Carrefour33Financial statements of Carrefour5（1）Consolidated statement of income5（2）Consolidated balance sheet54 Calculation of financial ratios65. Wal-Mart S

2、tore financial statements8(1) Balance sheet8(2) Income statement96. Comparison of financial ratios for Carrefour and Wal-Mart107. The question I found:118. How to solve the question?129. The way to solve the question:1210. Sample description:1611. Data analysis:1712Conclusion:1913Report:1914Referenc

3、e:201History of CarrefourCarrefour group was established in 1959, which was a Hypermarket concepts initiator . In 1960, Carrefour Company opened the first shopping malls in the suburb of French capital- Paris which called Parmelan Haute Savoie . In the mall, the varied types of food, the explicit cl

4、assification, the good service and the low price made its succeed at the beginning of the business. And just in four days, all goods in the store were sold out. In 1963 http:/lexpansion.lexpress.fr/outils/404.asp, it opened the worlds first large-scale supermarket in France. In 1969, it began to ent

5、er the international markets. In the middle of 1970s, it explored the other international markets expect Europe. Brazils Carrefour was the first stop in South America Continent, and it was also the first stop in whole America Continent. Until 1988, Carrefour decided to move into the United States. T

6、he location was chosen in Philadelphia suburb because this was the birthplace of American democracy in the middle of the 1700s. However, Carrefour developed miserably in America. In 1993, Carrefour had to close the only two malls in the United States, and dropped out the competition of American reta

7、il market completely. Then, Carrefours core strategies turned to Asian markets which were rising abruptly. In 1995, the number of the branches of the Carrefour in other countries was more than that in France. On August 30, 1999, the Promodes and the Carrefour merged and became the worlds second larg

8、est retail groups. So far, Carrefour has become the largest retailers in Europe, and it also has become the second largest retailers in the world. In 2004, Carrefour group was honored as the 22th in the worlds top 500 enterprises by the Fortune magazine. And Carrefour updated its logo in 2009 .2Curr

9、ent Condition of CarrefourThe main profitable way of Carrefour is from Agio. Carrefour buys goods in the low price and sold to customers at higher prices so that it can make a large profit. In addition，Carrefour has many other profitable ways, such as the entrance fee. Any Brand who wants to enter t

10、he Carrefour must pay a certain entrance fee to Carrefour accordance with its Brand awareness and the number of the products, what is called threshold. Any businesses want to sell their products in Carrefour whose premise is to pay money. And another way is sales promotion expense. In a supermarket,

11、 besides having a good geographical position, the price is absolutely the most important factor to decide its popularity because customers mostly prefer to buy the cheaper one. So, Carrefour requires that every brand in its supermarkets should do sales promotion periodically. Carrefour transfers pro

12、fits to customers on the premise that it sacrifices the advantage of suppliers. In other words, they spend other peoples money to increase popularity and do propaganda for themselves.Carrefour developed nearly 2000 kinds of products. These products with Carrefours own brands only appear in Carrefour

13、 in varied forms. And they are also sold by the most preferential price and the strict control on quality. In the future, the development of their own brand will become another big profitable way.DataSources:3Financial statements of Carrefour（1）Consolidated statement of incomeCarrefourConsolidated s

14、tatement of incomeIn millions of euros200920102011Sales, net of taxes801258051181271Loyality program756774816other revenue220421032309total revenue812568184082764Cost of sales635786396964912Margin of current activities178321787117852Current operating income before D&A and provisions405843773883Depre

15、ciation & provisions162516751701Current operating income 265827012182Non current income and expenses12689992662Operating incominancial result528648757Result before tax112510551238Income tax7566101002Net income from recurring operations of consolidated companies9434452240Equity accounted

16、 companies453464minority interests12513925Net income from recurring operations group share4563402202Discounting operations Group share503932573Discounting operations Minority Interest547Total net income512568404Net income Group Share436433371（2）Consolidated balance sheetConsolidated balance sheetin

17、millions of eurosAssets200920102011Intangible assets11256129309706Tangible assets145201529713771Financial investment175617981713Deferred tax assets723766745Investment properties502536507Consumer credit from financial-service companies-long term254221122236Non Current assets304483344028676Inventories

18、611869946848Trade receivables255725552782Consumer credit from financial-service companies-short term342334443384Other receivables154616641437Current financial assets10761811911Cash and cash equivalents348132713849Current assets194521973919211Non current assets of discontinued activities45347244Total

19、508725365047931LiabilitiesShareholders equity, Group Share7052595846617Minority interests in consolidated companies12859791009Shareholders equity1558105637627Deferres tax liabilities579560586Provisions for contingencies314831883680Borrowings-long term10321103659523Non current liabilities134861460514

20、208Borrowings-short term242027152149Trade payables167241679615362Bank loans refinancing-short term438545274482Other debts415841224104Current liiabilities275862816026096Non current liabilities of diiscontinued activities2543210Total535125365047931Data Source: 4 Calculation of financial ratiosRatioMet

21、hod of Computation201120102009Current ratioCurrent assets/currents liabilities0.740.700.71Acid-test ratioQuick assets/currents liabilities0.470.450.48Account receivables turnoverNet sales/average accounts receivables52.4751.9851.73No. of credit days to customers360/accounts receivables turnover6.866

22、.936.96Inventory turnoverCost of goods sold/average inventory9.769.619.56No. of inventory days360/average inventory turnover36.9037.4437.67Solvency ratio(Total shareholders equity/Total assets)*10015.9119.693.06Rate earned on total assets(Operating income)*100/average total assets0.953.362.86Ratio o

23、f net sales to assetsNet sales/average total assets0.181.581.58Rate earned on shareholders equityNet income*100/average total shareholders equity5.646.586.62Data analysis:Current ratio means the ratio of current assets to current liabilities. In the table, we can see that the current ratio is stable

24、, which means that Carrefours current assets and current liabilities are stable. Acid-test ratio is the ratio of quick assets to current liabilities. We can see this ratio is steady. Quick assets is the sum of cash, receivables, and marketable securities. The data mean in Carrefour the ratio of quic

25、k assets to current assets is steady. And its current liabilities level is stable. In the table we can also see that account receivables turnover and No. of credit days to customers are also stable. The former mean measures how frequently during the year the accounts receivables are being converted

26、to cash by dividing net sales by the average net accounts receivables. The higher the data are, the more credit it has.Inventory turnover measures the relationship between the volume of goods (merchandise) sold and the amount of inventory carried during the period. This ratio means Carrefours averag

27、e inventory is stable. Now lets see the solvency ratio, in 2009, this number is low, but in 2010 and 2011, this ratio became high, which means that in 2010 and 2011 the ability of Carrefour to pay its debts as they come true was bad. Rate earned on total assets is the ratio of operating income to to

28、tal assets. In 2011, Carrefours operating income became less. In the same way, we can see that in 2011, Carrefours net sales became less too. The rate earned on shareholders equity is stable during the recent three years. 5. Wal-Mart Store financial statements(1) Balance sheet Balance sheet （in mill

29、ions of U.S. dollars）20112010 2009AssetsCash & Equivalents7,9077,2755,569Marketable Securities000Receivables4,1443,9053,654Inventories33,16034,51135,180Raw MaterialsN/AN/AN/AWork in ProgressN/AN/AN/AFinished GoodsN/AN/AN/ANotes Receivable000 Other Current Assets3,1203,2583,182Total Current Assets48,

30、33148,94947,585Property, Plant & Equipment137,848125,820128,384Accumulated Depreciation38,30432,96431,367Net Property, Plant & Equipment102,30795,65397,017Investments & Advances000Other Non-Current Assets000Deferred Charges000Intangibles16,12615,26016,071Deposits & Other Assets3,9423,5672,841Total A

31、ssets170,706163,429163,514Liabilities & Shareholders EquityLiabilitiesNotes Payable01,5065,040Accounts Payable30,45128,84930,370(2) Income statementIncome statement （in millions of U.S. dollars）201120102009Net Sales or Revenue408,214405,607378,799Cost of Goods Sold304,657306,158286,515 Gross Profit1

32、03,55799,44992,284Research & Development Expenses000Selling & Administrative & Depr. & Amort. Expenses79,60776,65170,288Income before Depreciation & Amortization23,95022,79821,996Depreciation, Depletion, Amortization000Non-Operating Income181284305Interest Expense2,0652,1842,103Pretax Income22,06620

33、,89820,198Provision for Income Tax7,1397,1456,908Minority Interest513499406Investment Gains/Losses (+)000Other Income/Charges000Income Before Extraordinaries & Disc.Operation14,92713,25412,884Extras Items & Discontinued Operations-79146-153Net Income14,33513,40012,731EPS Report Date2010/02/182009/02

34、/172008/02/19Average Shares used to compute Diluted EPS 3,8773,9514,072Average Shares used to compute Basic EPS 3,8663,9394,066Income Before Non-recurring Items 14,20413,50512,965.32Income From Non-Recurring Items 210-251-81.32EPS - Basic, net 3.713.403.13EPS - Diluted, net 3.703.393.13Perf Div - Ac

35、c & Pd N/AN/AN/ADividends (common) 4,153.093,726.423,524.23Dividend per share (common) 1.090.950.88Data Sources: 6. Comparison of financial ratios for Carrefour and Wal-MartRatioMrthod of Computation2011Carrefour2011Wal-MartCurrent ratioCurrent assets/currents liabilities0.741.59Acid-test ratioQuick

36、 assets/currents liabilities0.470.50Account receivables turnoverNet sales/average accounts receivables52.47104.64No.of credit days to customers360/accounts receivables turnover6.863.44Inventory turnoverCost of goods sold/average inventory9.768.89No. of inventory days360/average inventory turnover36.

37、9040.51Solvency ratio(Total shareholders equity/Total assets)*10015.9117.84Rate earned on total assets(Operating income)*100/average total assets0.950.11Ratio of net sales to assetsNet sales/average total assets0.182.46Rate earned on shareholders equityNet income*100/average total shareholders equit

38、y5.6447.96Data analysis:The current ratio of Carrefour is lower than Wal-Mart. Acid-test ratio is almost the same between these two supermarkets. Account receivables turnover: Wal-Mart is much higher than Carrefour. Inventory turnover: Carrefour is almost as same as Wal-Mart. No. of inventory days:

39、Wal-Mart is little higher than Carrefour, as same as the rate earned on total assets. In terms of rate on total assets: Carrefour is higher than Wal-Mart. Then let us see the ratio of net sales to assets: Wal-Mart is little higher than Carrefour. The rate earned on shareholders equity of Wal-Mart is

40、 great higher than Carrefour. So I think the condition of Wal-Mart is better than Carrefour.7. The question I found:1. The operating income and net sales are becoming less in 2011.2. The ratio of net sales to assets became less in 2011.3. The solvency ratio was very law in 2009. 4. Why is the curren

41、t ratio of Carrefour lower than Wal-Mart?5. Why is the account receivables turnover of Carrefour lower than Wal-Mart?6. What causes the rate earned on shareholders equity of Carrefour lower than Wal-Mart?8. How to solve the question?First, I will look for the definition of the terms of these four qu

42、estions. And I will think about the society environment during 2009 to 2011. During 2008, there was an international finance crisis and it caused many problems to Carrefour and Wal-Mart. Then I will think about “people” problem. If someone has problem, it will also cause problem. In addition, the co

43、mponents in the markets becoming stronger will lead to the ratio down. Last but not least, I will ask our teacher for help.9. The way to solve the question:1. Operating income is often considered the most appropriate measure of managements ability to use an organizations operating assets. It provide

44、s a better assessment of the organizations profitability trend than net income. Managers can increase operating income by isolating each income statement component that feeds into operating income: sales revenue, cost of goods sold or cost of services and operating expenses, which are selling and ad

45、ministrative expenses. An increase in operating income is a net effect. While a manager could increase sales and decrease product costs, for example, operating income is unchanged if executive salaries increase in proportion2. A return on net assets is a financial ratio used by investors to determin

46、e how capital-intensive a company is. Capital-intensive companies must have a significant amount of money tied up in assets such as machinery in order to produce their goods. Having a higher return on net assets means a company is generating more profit with fewer dollars tied up in capital. To calc

47、ulate the return on net assets, you need to know the companys after-tax profit, the working capital and the fixed assets of the company3. It is measured to check the ability of a company to meet its debt obligations normally. In this ratio the income of a company is compared with its expenses and to

48、tal debts, and then the companys ability is judged whether it can meet its debt obligations of not. Solvency ratio is normally measured by the debtor companies to access the ability of a company to return its debts. If a company does not seem able returning the debts, it would not be served with deb

49、ts. For the calculation of this ratio, “after tax net profit” and “depreciation” are added and the result is then divided by the addition of “l(fā)ong term liabilities” and “short term liabilities”. In different countries, different methods and formulas are used for the calculation of this ratio. If a c

50、ompanys ratio is equal or more than twenty percent, then such a company would be considered financially strong and capable of returning the debt obligations which are normally called as long term obligations. If the ratio is lower than twenty percent then it means that the company has more chances o

51、f default on its long term obligations. Debts are not given to such companies. Twenty percent ratio is not mandatory for all of the financial companies to take as good ratio. Many financial institutions demand more than thirty percent ratio of solvency. The demand of this ratio varies company to com

52、pany.4. Investors, managers, business owners and other stakeholders use financial ratios to measure the performance of companies. The current asset ratio, or working capital ratio, is one commonly used tool that measures the liquidity and financial position of a company. It is calculated by adding u

53、p all of the companys current assets and dividing them by the total amount of the companys current liabilities. This ratio is used to determine how well a company is able to pay its obligations(1) Understand what short-term means.(2) Calculate the current asset ratio.(3) Pay off some of the current

54、liabilities.(4) Pay off as much debt as possible.(5) Take out long-term debt.5. Financial ratios help analysts research trends for insights on how to adjust for better performance. Accounts receivable is a line item on the balance sheet. It tells the investor how much of sales were made on credit. That is, sometimes customers pay on credit and the accounts receivables turnover ratio helps the analyst to gauge how much of sales are made on c