Financial Analysis of Wal-Mart

Financial Analysis of Wal-Mart

Overview of the Corporation

Wal-Mart Stores operates retail stores in a range of formats. Co.'s operations comprise three business segments: Walmart U.S., which operates retail stores in different formats in the U.S. under the Walmart or Wal-Mart brand, as well as Walmart's online retail operations, walmart.com; International, which consists of retail operations in 14 countries, and comprises of retail stores and restaurants including discount stores, supercenters and Sam's Clubs; and Sam's Club, which consists of membership warehouse clubs in the U.S. and the segment's online retail operations, samsclub.com. As of Jan 31 2011, Co. had a total of 4,413 domestic stores and 4,557 international stores. 

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).

Summary of Financial Statements

During the fiscal year 2010-11, the revenue of the company has increased from $408 billion to $421 billion which is a growth of 3.26%. At the same time, cost of goods sold increased from $304 billion in 2010 to $314 in 2011 which is greater growth (3.44%) than the revenue figures. It left the gross margin declining to 25.26% of the revenue from 25.4%

Year over year, Wal-Mart Stores Inc. has been able to grow revenues from $408.1Billion to $421.8Billion. Most impressively, the company has been able to reduce the percentage of sales devoted to selling, general and administrative costs from 19.45% to 19.21%. This was a driver that led to a bottom line growth from $14.4B to $16.4B. The EBT increased from $22.378 billion to $ 23.538 billion which is growth of 4.93%. Over all, the net income has witnessed the growth of 12.32% and stand at 16.38 billion which rose from $ 14.37 billion in 2010 (see appendix for detailed financial statements).Financial Ratio Analysis

2011

2010

2009

2008

2007

Target Corp

Industry Average

Liquidity Ratios

 

 

 

 

 

 

 

Quick Ratio

0.21

0.22

0.2

0.16

0.2

0.87

0.76

Current Ratio

0.89

0.87

0.88

0.81

0.9

1.71

6.43

Net Current Assets % TA

-3.65

-4.24

-3.94

-6.65

-3.42

16.34

25.67

Debt Management

 

 

 

 

 

 



LT Debt to Equity

0.64

0.51

0.53

0.52

0.5

1.01

0.85

Total Debt to Equity

0.73

0.58

0.65

0.69

0.63

1.02

0.88

Interest Coverage

12.75

12.71

12

12.23

13.41

6.94

7.4

Profitability Ratios

 

 

 

 

 

 



ROA % (Net)

9.33

8.58

8.17

8.09

7.8

6.64

4.4

ROE % (Net)

23.53

21.08

20.58

20.18

19.67

18.99

10.74

ROI % (Operating)

22.16

21.82

20.98

20.96

21.29

16.62

2.28

Asset Management

 

 

 

 

 

 

 

Total Asset Turnover

2.4

2.44

2.47

2.41

2.41

1.53

7.63

Receivables Turnover

91.38

101.43

107.02

116.66

126.74

9.04

56.27

Inventory Turnover

9.08

9

8.79

8.32

8.02

6.31

8.96

Accounts Payable Turnover

13.18

13.77

13.66

12.96

13.04

10.29

21.48

Market Measures

 

 

 

 

 

 



Cash Flow per Share

6.47

6.79

5.86

5.01

4.84

7.3

0

Book Value per Share

19.49

18.69

16.63

16.26

14.91

22

0

Source: Business WeekFinancial Ratio Analysis

Liquidity Analysis

The liquidity position of the company is deteriorating. It has not only declined, but it is far lesser than the industry average. The quick ratio of the company is 0.21 in the year 2011, where as the industry average is around 0.76 in the year 2011. Similarly, the current ratio of the company is around 0.89 in 2011, whereas industry average is 6.4. as compared to Wal-mart, Target Corp is maintaining a good position in liquidity. Its current ratio is 1.71 and quick ratio is ...