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In this section provide a brief overview of the corporation. Participants are not
Arizona
http://www.walmart.com
WMT
Wal-Mart is one of the largest chains, which operates in three large segments: The
Walmart U.S., the Walmart International, and the Sam’s Club. In this report we are
Wal-Mart’s Financial Reporting Analysis 2
focusing mainly on Walmart US. This latter is has a momentous presence in the retail
industry, operating throughout the United States. “ The Walmart U.S segment includes
the Company’s mass merchant concept under the Walmart or Wal-Mart brand, as well
Walmart offers various lines of products and services including the following:
home furnishing, sporting goods, baby products, and grocery items (Washington,
n.d)
● Photo Services: Walmart makes a photo lab available for customers inside the
stores and online. They are provided the possibility to upload their photos via the
company’s website, or drop them off for developing via a store kiosk
(Washington, n.d)
been providing customers with prescriptions, which they could pick-up in-store or
for no more than four dollars in-store, and ten dollars for a 90-day supply
(Washington, n.d)
also provides its customers with a wide range of financial services, namely a
non-annual-fee credit card, a debit card ready to obtain in-strore or online, money
transfer service through MoneyGram, and check cashing and check printing. At
Walmart, customers can also purchase money orders, gift cards, and pays bills
(Washington, n.d)
Wal-Mart’s Financial Reporting Analysis 3
● Wireless Services: Last but not least, Walmart partnered with T-mobile only to
give birth to The Walmart Family Talk Wireless, which is a service that provides
customers with a family plan for unlimited text and voice calls (Washington, n.d)
Vertical Analysis
Assets
Current assets
Cash
Non-current assets
Liabilities
Current liabilities
Non-current liabilities
Stockholders' equity
Assets
Current assets
Cash
Non-current assets
Liabilities
Current liabilities
Non-current liabilities
Stockholders' equity
Horizontal Analysis
Current Prior
Assets
Current assets
Cash
Wal-Mart’s Financial Reporting Analysis 10
Non-current assets
Liabilities
Current liabilities
Non-current liabilities
Stockholders' equity
The vertical, horizontal and year to year change analysis of the balance sheet of
Walmart shows that the company’s current assets for the current year has increased
from the previous year with a significant increase in cash and account receivables. The
company has also invested in long-term assets in the current year. Though the
company got rid of some of its current liabilities from the previous year, its short-term
debt has increased by more than 100%. The company has also been successful in
also indicates that the company is unable to make the most of its cash in hand.
Therefore, the company should watch its cash in hand closely. The company also
needs to revisit its credit policies to ensure that it does not have a lot of money stuck in
account receivables.
There has been a slight drop in the goodwill of the company from the previous
year, which indicates a loss of confidence of the shareholders in the company. The
company’s short-term liabilities have increased by more than 12%. It has a significant
investment in Land and other long-term assets. The company’s retained earnings form
a major part of their equity. The company has been very successful in keeping a
Vertical Analysis
Operating expenses
Income before income taxes 25,737,000 5.49% 24,398,000 5.46% 23,538,000 5.58%
Provision for income taxes 7,981,000 1.70% 7,944,000 1.78% 7,579,000 1.80%
Operating
expenses
Sales,
General and
Total operating
Other income
Income before
Provision for
Horizontal Analysis
Operating expenses
a. The money a business makes from its products and services is considered
the company's Total Revenue. Wal-Mart Stores Inc.'s net sales increased
b. Cost of revenue taken out from Sales revenue gives the Gross Profit. Total
revenue and Cost of revenue both were observed to increase over years.
Wal-Mart Stores Inc.'s Gross Profit increased from 2011 to 2012 and from
2012 to 2013
c. Income taxes are excluded from the Business Total income which is
calculated as the Net income. Wal-Mart Stores Inc.'s Net income decreased
Wal-Mart’s Financial Reporting Analysis 19
from 2011 to 2012 as the net income from discontinued ops was in loss and
d. Operating Income divided by the total revenue gives the Profit margin. It
customers at much cheaper prices than competitors and still make money.
Wal-Mart Stores Inc.'s Profit margin increased from 2011 to 2012 and from
2012 to 2013.
e. Revenues are calculated as the total amount made by the sales in that annual
period where as Expenses are calculated as the total amount used to make
expenses have a positive increased from 2011 to 2013. This implies walmart
sold more products within the same period of time than their previous year
where is there was no positive net income but did not run into loss either. This
but could not achieve the same continuing forward in the future years.
statement.
each year. There are no good or bad EBITDA numbers. Any positive number
implies the company has profits. The income sheet implies that walmart has
Compute the ratios for the most current year in following categories. The calculations used to
determine the answers for the ratio analysis must be included in the appendix.
Liquidity Ratios
Formula Ratio
securities+net receivable)/
current liabilities
Sold/365)
Days
Maturities of Long-term Debt and Maturities of Long Term Debt payable within
Formula Ratio
controlling Earnings ÷
Wal-Mart’s Financial Reporting Analysis 22
Capitalized Interest
Assets
Shareholders Equity
(Shareholders Equity –
Intangible Assets)
Profitability Ratios
Formula Ratio
58055000=1.
0242
Assets
progress) 654
Investor Ratios
Formula Ratio
Wal-Mart’s Financial Reporting Analysis 24
Outstanding
returning items
In the above table, we are measuring the liquidity & Long term Debt Ratio. Those
latter are measuring the ability of our company to pay-off its short-term debt
By comparing the company’s liquid assets and its liabilities, the greater the liquid
assets compared to short term & Long term debt liabilities the better because it
shows that the company can pay its debts that are due. Nevertheless, when the
opposite happen, the company will have difficulties meeting its obligation and that is
Our corporation is in a good stand point, as the assets exceed liabilities, meaning
that the company will be able to pay off debt that are due now and the ones that are
Testing a company’s liquidity & Long Term Debt ratio is the primary step for
compare the firm to its competitors and allow them to implement changes within the
industry
PROFITABILITY RATIOS:
Wal-Mart’s Financial Reporting Analysis 26
In the table above, we are discussing the profitability ratios, which is the business’s
Every firm is concerned about its profitability ratio. The profitability helps us
determine the company’s bottom line and its return to investors. It also shows the
Looking at the net profit margin, we can say that 3.62 cents of every dollar is a profit
Users of this information are company managers and owners because they are the
ones looking at the firm’s ability to transform sales dollars into profit.
INVESTORS RATIOS
In this category we are measuring the investor’s ratios which are very important to
Investors should look closely into this category in order to know if the company is
paying dividends, how much earning per share will they get, and how sensitive is the
In our case, the Walmart Company is standing in a fair position. We can tell that from
the degree in financial leverage that for every 1% change in operating income. EPS
should change by 0.98% and that is fair for the company. As far as dividends,
Investors are the main users of this information because they are concerned about
how much money they will get per share if they invest in this certain corporation.
Wal-Mart’s Financial Reporting Analysis 27
SECTION 5: CONCLUSIONS/RECOMMENDATIONS
Walmart should build some alliances and strategic joint ventures with other
global retail companies in order to expand itself at the international front, enhance
penetration into the global market and withstand the cultural shocks not coming in
From the financial analysis that the account receivables are very high, we recommend
that the company should revisit its credit policy. The company should ensure that its
credit policy is not too lenient since it might in order to not have a lot of cash stuck in
receivables. The company should be able to ensure that their accounts receivables
turnover is quicker.
We recommend Walmart should stick with its current policies and strategies for the
operations so that there are no significant changes in their statements across the years.
Wal-Mart’s Financial Reporting Analysis 28
Appendix
Liquidity Ratios
= 6768/(466114/365) = 5.3
Sales
= 43803000/(352488000/365) = 45.3578
= 365 ÷ 10.64 = 34
collection period
= 34 + 5 = 39
Intangible Assets)
Profitability
Return on Investment = Net Income Before Non Controlling Interest & Non
Recurring Items + {(Interest Expense) + (1- Tax Rate)} / Avg (Long term