Wal Marts return of assets or ROA is trending downward This is negative for Wal

Wal marts return of assets or roa is trending

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liquidate all of its assets to pay off liabilities it would have difficulty doing this. Wal-Mart’s return of assets or ROA is trending downward. This is negative for Wal-Mart showing that it is not earning as much on a yearly basis from its total assets. This is probably an indication of Wal-Mart’s rapid expansion and the company not earning as much on new stores or losing money on existing stores. Wal-Mart’s return on shareholders’ equity increased until 2006 and since has been trending downward. While the current trend is downward in recent years this can mostly be a reflection of the poor economic state of the United States, the downward trend is not good and should be something that Wal-Mart puts emphasis on raising. However, a return in the 12% to 15% range is average and Wal-Mart is operating well above this and this is good as it indicates the return to shareholders’ is about 9% higher than average. Key Success Factors: As one can see from the finances of Wal-Mart as well as the 5 Forces Model and the number of opportunities and strengths Wal-Mart has from the previous sections, the company is doing well.
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Based on this writers company evaluation there are five factors that are key to Wal-Mart’s current and continued success and these are as follows: 1. Cost efficient operations and everyday low prices. Wal-Mart’s ability to examine its value chain and scrutinize every cost is key to their success. By doing this Wal-Mart has been able to get construct new stores at low prices, get products at low prices, and operate at low costs and then as a result of this are able to provide the lowest priced items to consumers. The low prices appeal to a broad range of consumers and ultimately produce large volumes of sales creating large revenues. Wal-Mart must continue to be the low cost provider for future success. 2. Wide product selection and a mix of brand name and private-label merchandise. Wal-Mart’s diverse selection of products and then having multiple choices of each product are essential to Wal-Mart’s current and continued success. Having the wide selection of products allows consumers to get everything they need in one convenient shopping stop. This is a top reason consumers choose Wal-Mart over substitutes. 3. Expansion into foreign markets. Wal-Mart currently holds a strong position in the global economy. This being said the US market is becoming over saturated with many discount retailers in many locations. Wal-Mart’s future success will depend on being able to expand into foreign markets and being able to use their core competencies allow them to be the low cost provider in these markets. 4. Strong relations with suppliers. Wal-Mart’s strong relationship with suppliers is a must to get the low prices needed to be the low cost leader. As Wal-Mart is the largest customer for most all
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of its suppliers they are able to command the low prices needed to be the low cost provider. Once Wal-Mart has selected a supplier they integrate services into the supplier examining the
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