FINANCIAL ANALYSIS

Wal Mart Financial Analysis



Financial Analysis

Introduction

Wal-Mart is one of the most renowned retail stores of the world. For several years, it has remained at the top brands of the world. Wal-Mart Stores, Inc., functions as the chain of discount departmental, largest grocery retailer store and warehouse. The company plan was initiated by Sam Walton in 1962. In 1972, it was incorporated in the New York Stock Exchange list and was branded as Walmart in 2008. According to the Forbes Global 2000 list, Wal-Mart Stores, Inc. is considered as 18th largest public corporation and one of the largest public corporations as per the revenue generation, of United States of America.

It is also considered as one of the largest employer around the world with almost 2million people working under the banner of Wal-Mart. Wal-Mart Stores, Inc., run around 8500 stores (approximately) in 15 different countries around the world, with different retail names. In USA, it functions under its own name, whereas in some states like Mexico, it operates as Walmex. Internationally it operates as Asda (UK), Seiyu (Japan), Best Price (India) and many more. Its operations in Korea, Germany had been unsuccessful (Dopson, R. & Hayes, K, 2008).

The aim of the paper is to analyze the financial strength of Wal Mart, through a thorough analysis of the financials of the company including Income Statement, Balance Sheet and Cashflow. The study also include Horizontal, Vertical and Ratio analysis to find the trend of various financials of the company.

Thesis Statement

To assess the financial position of Wal Mart through a comprehensive financial analysis of the company.

Industry Analysis

Competing in a monopolistically competitive market, Wal-Mart is an international retail organization that has been established with the objective of becomes a global low-cost provider and simultaneously giving out the best and most cost-effective discounts to both its warehouses.

Giants and tycoons like Tesco, Target, Kmart, ShopKo and other fight neck-and-neck to target its competitors and gain the broadest customer base.

The major source of competition for Wal-Mart is Target, it is currently ranked second among discount retailers, the major competitive advantage of Target is that it offers more upscale, fashionable merchandise than that of Wal-Mart and has earned a reputation for inexpensive, chic merchandise. The second source of competition is Kmart, which operates as a subsidiary of Sears, the basic competitive advantage it has over Wal-Mart is that its advertising budget as a percentage of sales is higher that Wal-Mart's (Fromlet, H. 2001).

Financial Analysis

Income Statement

As Reported Annual Income Statement

 

 

 

% Change

Report Date

2011

2010

2009

2011

2010



 

 

 

 

 

Scale

Thousands

Thousands

Thousands

%

%

Net sales

418,952,000

405,046,000

401,244,000

-3.32%

-0.94%

other income

2,897,000

3,168,000

4,363,000

9.35%

37.72%

Revenues

421,849,000

408,214,000

405,607,000

-3.23%

-0.64%

Cost of sales

315,287,000

304,657,000

306,158,000

-3.37%

0.49%

Operating, selling, general & admin expenses

81,020,000

79,607,000

76,651,000

-1.74%

-3.71%

Operating income (loss)

25,542,000

23,950,000

22,798,000

-6.23%

-4.81%

Interest expense on debt

1,928,000

1,787,000

1,896,000

-7.31%

6.10%

Interest expense on capital leases

277,000

278,000

288,000

0.36%

3.60%

Interest income

201,000

181,000

284,000

-9.95%

56.91%

Interest income (expense), net

(2,004,000)

(1,884,000)

(1,900,000)

-5.99%

0.85%

Income (continuing operations) before income taxes & minority interest United States

18,398,000

17,652,000

16,239,000

-4.05%

-8.00%

Income (loss) (continuing operations) before income taxes & minority interest International

5,140,000

4,414,000

4,659,000

-14.12%

5.55%

Income (loss) from continuing operations before income taxes

23,538,000

22,066,000

20,898,000

-6.25%

-5.29%

Current federal income taxes provision

4,600,000

5,798,000

4,771,000

26.04%

-17.71%

Current state & local income taxes provision (benefit)

637,000

599,000

564,000

-5.97%

-5.84%

Current international income taxes provision (benefit)

1,466,000

1,246,000

1,229,000

-15.01%

-1.36%

Current provision for income taxes

6,703,000

7,643,000

6,564,000

14.02%

-14.12%

Deferred federal income taxes provision (benefit)

818,000

(449,000)

614,000

-154.89%

-236.75%

Deferred state & local income taxes provision ...