The quick ratio, also known as the acid test ratio, is used to measure the short term liquidity of a company. It basically measures the ability of a company to pay its current liabilities based on available cash, short term investments, and receivables. Both Wal-Mart and target are multimillion dollars corporations and this has been widely known by many. Based on information taken from both the companies' financial statements, which can be located on their websites, a quick ratio was performed to measure the liquidity of both the companies for the year 2004. At first sight, Wal-Mart's earning seems to be a lot larger than Target. For the 2004 year in their annual report, Wal-Mart reported a net income of 9055 millions and target reported 3,798 millions. Wal-Mart obviously made a larger amount of money that Target. Since the quick ratio measures the liquidity of a company, Wal-Mart demonstrated a result showing 1.02
English: Inside the Walmart (still branded as Wal-...
A protest in Utah against Wal-Mart
English: Walmart Home Office, the headquarters of ...compared to targets 1.53. The quick ratio shows that although Wal-Mart is a much larger corporation in the year 2004, Target performed better. In a news report posted on targets web site, it is stated that Target performed well above the industries standard for that year and above their own projections ("Target's Financial Data Center").
References:
"Target's Financial Data Center" (2005). Retrieved November 4, 2005, from
www.target.com/findatacenter%NOV2005.html