Formulation of Grand Financial Index (Gfi). an Empirical Study on Wal-Mart (1987-2016)

Research Paper (postgraduate) from the year 2017 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, Sikkim Manipal University Bangalore (Sikkim University, Gangtok, India), language: English, abstract: In the study of Financial Management and Financial Accounting, the Financial Ratios have always played important roles in determining the quality of operational and financial performances of a business organization. This research paper's objectives are primarily two - fold: first, to formulate composite indices under five major categories, namely; Liquidity, Leverage, Operating Efficiency, Profitability, and Market Measures (Fraser and Ormiston, 2012) and review whether the composite indices under each category could be regressed by their own financial ratios; and second, to formulate a Grand Financial Index (GFI) comprising of all the five composite indices which would be able to represent a holistic view of a business organization by taking into consideration all the necessary key points covering all the aspects of financial accounting. In this context, a time - series empirical study of 30 years (1987 - 2016) has been conducted on Wal-Mart, the leading company (in terms of revenue) on the FORTUNE 500 list, in order to supplement empirical evidence to the findings. In addition to that, an attempt has been made to formulate a regressionary relationship between the Grand Financial Index (GFI), the Composite Short - term Liquidity Index (CSLI), the Composite Financial Leverage Index (CFLI), the Composite Activity Ratio Index (CARI), the Composite Profitability Ratio Index (CPRI), and the Composite Market Ratio Index (CMRI).