recently it was announced that two giant french retailers carrefour sa and promodes 533604

Recently, it was announced that two giant French retailers, Carrefour SA and Promodes SA, would merge. A headline in the Wall Street Journal blared, “French Retailers Create New Wall-Mart Rival.” While Wal-Mart”s total sales would still exceed those of the combined company, Wall- Mart”s international sales are far less than those of the combined company. This is a serious concern for Wal-Mart, since its primary opportunity for future growth lies outside of the United States. Below are basic financial data for the combined corporation (in euros) and Wal-Mart (in U.S. dollars). Even though their results are presented in different currencies, by employing ratios we can make some basic comparisons.

Instructions

Compare the two companies by answering the following.

(a) Calculate the gross profit rate for each of the companies, and discuss their relative abilities to control cost of goods sold.

(b) Calculate the profit margin ratio, and discuss the companies” relative profitability.

(c) Calculate the current ratio and debt to total assets ratios for the two companies, and discuss their relative liquidity and solvency.

(d) What concerns might you have in relying on this comparison?