Financial statement analysis for Walmart.docx
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1、Final Term ProjectACC 503 Financial ReportingTable of ContentsCompany Overview 3Industry Analysis .3Financial Analysis . 4Liquidity and Solvency Analysis . 4Efficiency Analysis . 6Profitability Analysis . 7Market Value Analysis 9Recommendation 9Appendix (Financial Statements from latest 10-k) n10Bib
2、liography .16Company OverviewSam Walton, a visionary leader with goals of great value and customer service founded the first Wal-Mart in 1962 in Rogers, Arkansas. With their slogan of “saving people money so they can live better,” Wal-Mart is leading the world as the largest retailer employing over
3、2 million employees and is currently ranked #2 on Forbes Fortune 500 company list Fortune 500 2012: Fortune 1000 Companies 1-100.CNNMoney. Cable News Network, n.d. Web. 28 Nov. 2012. . Wal-Mart has 10,524 stores to date, broken up into three different business segments Wal-Mart US stores (3,971 stor
4、es), Sams Clubs (620 stores), and Wal-Mart International (5,933 stores in 26 countries) Unit Counts & Square Footage.Wal-Mart Corporate. N.p., n.d. Web. 28 Nov. 2012. . The Wal-Mart U.S. segment includes the Companys mass merchant concept in the U.S. operating under the Wal-Mart or Wal-Mart brand, a
5、s well as . The Wal-Mart International segment consists of the Companys operations outside of the U.S. The Sams Club segment includes the warehouse membership clubs in the U.S., as well as WMT Form 10-K. Form 10-K. N.p., n.d. Web. 28 Nov. 2012. . Looking at the revenue, the international business se
6、gment has been steadily growing in the past 3 years while the Sams Club segment has been relatively even.Revenue by Business Segment ibid20122011 2010 (Dollar amounts in millions)Net SalesPercentNet SalesPercentNet SalesPercentWal-Mart U.S.264,186 59.5%260,261 62%259,919 64%Wal-Mart International125
7、,873 28.4%109,232 26%97,407 24%Sam s Club53,795 12.1%49,459 12%47,806 12% Net Sales443,854 418,952 405,132 Industry AnalysisWal-Mart can be classified in a few different industries, the discount/variety stores according to Yahoo Wal-Mart Stores, Inc. Company Profile - Yahoo! Finance.Wal-Mart Stores,
8、 Inc. Company Profile - Yahoo! Finance. N.p., n.d. Web. 28 Nov. 2012. . The reason being Wal-Mart operates many different types of stores that falls into multiple categories. In Wal-Mart Stores U.S, there are Wal-Mart Discount Stores, Wal-Mart Supercenters, and Wal-Mart Markets. Their primary compet
9、itors to their discount stores are Kmart, Target, Zellers, and Meijer. Their main competitors for their Sams Club stores are Costco and BJs. Financial AnalysisLiquidity & Solvency Short-term liquidity problems arise when operating cash inflows dont match outflows. Wal-mart gets their goods from supp
10、lier on credit, promising pay back in 30 or 60 days. The operational flow of their stores beings with the goods shipped to warehouses. Then, the goods are sent to Wal-mart stores, sold to shoppers, who pay Wal-mart by cash or charge card. If the receivables from customers arent collected on time, Wa
11、l-mart could find themselves short of cash to pay off to employees, suppliers, and others. Current Ratio is used to evaluate a companys short-term liquidity. The current ratio is an indication if the company has the ability to pay back their short-term liabilities within 30 or 60 days. If the ratio
12、is lower than 1, the company may not be in a great financial condition. It provides a measure to how liquid the company is in converting some of their assets into cash. Wal-Marts current ratio for 2012 is 0.88, and has been around that range for the last 5 years. Wal-Mart20122011201020092008Current
13、assets54,97552,01248,03248,94948,020Current liabilities62,30058,60355,54355,39058,478Current ratio0.880.890.860.900.80Looking at Wal-Marts competitors, we see that they are in a better position to convert their assets into cash. While Wal-Marts current ratio is lower than two of its main competitors
14、, there are other ratios to consider when looking at their financial health. Current RatioCompetitors20122011201020092008Wal-Mart 0.88 0.89 0.86 0.90 0.80 Costco 1.10 1.14 1.16 1.11 1.07 Target 1.15 1.71 1.63 1.66 1.60 A more short-run reflection of liquidity is quick ratio (current assets-inventori
15、es)/current liabilities). Taking no account of inventory, the rest of assets could turn into cash in a shorter time. The higher the quick ratio, the faster the company pays off their obligations. Wal-Mart Stores Inc.s quick ratio deteriorated from 2010 to 2011 and from 2011 to 2012 as shown from the
16、 chart below.Wal-Mart20122011201020092008Current Assets54,97552,01248,03248,94948,020Inventory40,71436,43732,71334,51135,159Current Liabilities62,30058,60355,54355,39058,478Quick Ratio 0.23 0.26 0.27 0.26 0.22 Again, comparing Wal-Mart to its competitors, it is also less liquid when comparing the qu
17、ick ratio to its competitors Costco and Target.CompetitorsQuick Ratio20122011201020092008Wal-Mart 0.23 0.26 0.27 0.26 0.22 Costco 0.48 0.55 0.56 0.49 0.45 Target 0.47 0.78 0.81 0.85 0.89 Long-term debt to assets ratio provides information about the amount of long-term debt in a companys financial st
18、ructure. The debt ratio will be higher if a company relies on borrowing long term debt. A company with a higher debt to assets ratio will be a greater solvency risk. Wal-marts long-term debt to assets was around 20% over the past 5 years. This says about 20 cents of each dollar was financed using lo
19、ng-term debt. Generally speaking, retailers always have a lower long-term debt to assets ratio, because they borrow more short-term debt than long-term debt.Wal-Mart20122011201020092008Long-Term Debt 44,07040,69233,23131,34929,799Total Assets193,406180,782170,407163,429163,514Long Term Debts to Asse
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