# Step-by-Step Analysis: Which Company is More Productive? To determine **which company is more productive**, we will compare the companies using the **EBIT margin** (Earnings Before Interest and Taxes as a percentage of sales/revenue), which is a measure of operational productivity. --- ## Step 1: Calculate EBIT Margin for HBC **Formula:** \[ \text{EBIT Margin} = \frac{\text{EBIT}}{\text{Total Sales & Revenues}} \times 100 \] ### For Year 1: \[ \text{EBIT Margin}_{\text{HBC, 1}} = \frac{.13}{7.1} \times 100 \approx 1.83\% \] ### For Year 2: \[ \text{EBIT Margin}_{\text{HBC, 2}} = \frac{.17}{7.3} \times 100 \approx 2.33\% \] ### For Year 3: \[ \text{EBIT Margin}_{\text{HBC, 3}} = \frac{.18}{7.3} \times 100 \approx 2.47\% \] --- ## Step 2: Calculate EBIT for Walmart Walmart's EBIT is not given directly, so we calculate it as: \[ \text{EBIT}_{\text{Walmart}} = \text{Net Sales} - \text{Cost of Sales (COS)} - \text{Operating, Selling, General (OSGA)} \] ### For Year 1: \[ \text{EBIT}_{\text{Walmart, 1}} = 285 - 220 - 51 = 14 \] ### For Year 2: \[ \text{EBIT}_{\text{Walmart, 2}} = 256 - 199 - 45 = 12 \] ### For Year 3: \[ \text{EBIT}_{\text{Walmart, 3}} = 230 - 178 - 40 = 12 \] --- ## Step 3: Calculate EBIT Margin for Walmart **Formula:** \[ \text{EBIT Margin} = \frac{\text{EBIT}}{\text{Net Sales}} \times 100 \] ### For Year 1: \[ \text{EBIT Margin}_{\text{Walmart, 1}} = \frac{14}{285} \times 100 \approx 4.91\% \] ### For Year 2: \[ \text{EBIT Margin}_{\text{Walmart, 2}} = \frac{12}{256} \times 100 \approx 4.69\% \] ### For Year 3: \[ \text{EBIT Margin}_{\text{Walmart, 3}} = \frac{12}{230} \times 100 \approx 5.22\% \] --- ## Step 4: Summary Table | | Year 1 | Year 2 | Year 3 | |--------|--------|--------|--------| | **HBC EBIT Margin** (%) | 1.83 | 2.33 | 2.47 | | **Walmart EBIT Margin** (%) | 4.91 | 4.69 | 5.22 | --- ## Final Summary - **Walmart** has a consistently higher EBIT margin compared to HBC in all three years. - This means Walmart is more productive in terms of generating operating profit from its sales. --- ### **Conclusion** > **Walmart is more productive than HBC, based on EBIT margin (operating profitability) in all three years.**

# Step 1: Calculate EBIT Margin for HBC To find the EBIT margin for HBC, we will use the following formula: ## Formula \[ \text{EBIT Margin} = \frac{\text{EBIT}}{\text{Total Sales & Revenues}} \times 100 \] ### Yearly Calculations #### For Year 1: - **EBIT**: \(0.13\) - **Total Sales & Revenues**: \(7.1\) \[ \text{EBIT Margin}_{\text{HBC, 1}} = \frac{0.13}{7.1} \times 100 \approx 1.83\% \] #### For Year 2: - **EBIT**: \(0.17\) - **Total Sales & Revenues**: \(7.3\) \[ \text{EBIT Margin}_{\text{HBC, 2}} = \frac{0.17}{7.3} \times 100 \approx 2.33\% \] #### For Year 3: - **EBIT**: \(0.18\) - **Total Sales & Revenues**: \(7.3\) \[ \text{EBIT Margin}_{\text{HBC, 3}} = \frac{0.18}{7.3} \times 100 \approx 2.47\% \] --- ### Summary of HBC EBIT Margins | Year | EBIT Margin (%) | |--------|------------------| | Year 1 | 1.83 | | Year 2 | 2.33 | | Year 3 | 2.47 | --- This concludes Step 1 of our analysis for HBC's EBIT margins.

# Summary of Each Step ## Step 1: Calculate EBIT Margin for HBC We calculated the EBIT margin for HBC using the formula \(\text{EBIT Margin} = \frac{\text{EBIT}}{\text{Total Sales & Revenues}} \times 100\). The EBIT margins for Years 1, 2, and 3 were approximately 1.83%, 2.33%, and 2.47%, respectively. --- ## Step 2: Calculate EBIT for Walmart Walmart's EBIT was derived from its net sales, cost of sales, and operating expenses using the formula \(\text{EBIT} = \text{Net Sales} - \text{Cost of Sales} - \text{Operating, Selling, General}\). The calculated EBIT values for Years 1, 2, and 3 were 14, 12, and 12, respectively. --- ## Step 3: Calculate EBIT Margin for Walmart We calculated Walmart's EBIT margin using the same EBIT margin formula: \(\text{EBIT Margin} = \frac{\text{EBIT}}{\text{Net Sales}} \times 100\). The EBIT margins for Years 1, 2, and 3 were approximately 4.91%, 4.69%, and 5.22%, respectively. --- ## Step 4: Summary Table A summary table was created to compare the EBIT margins of both HBC and Walmart over the three years. The results indicated that Walmart consistently outperformed HBC in terms of EBIT margin. --- ## Final Summary Walmart exhibited higher EBIT margins than HBC across all years, indicating greater productivity in generating operating profit from sales. This analysis shows Walmart's stronger operational efficiency compared to HBC.