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 (C...