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)