Financial Analysis Project

Kiley Webster
ACCT 2410
October 20, 2015

Appendix A
Financial Statements 2014-15

Balance Sheet
As of January 31,
2015

2014

Cash and cash equivalents

$9,135

$7,281

Receivables, net

$6,778

$6,677

$45,141

$44,858

$2,224

$1,909

(Amounts in millions)
ASSETS
Current assets:

Inventories
Prepaid expenses and other
Current assets and discontinued operations
Total current assets

$460
$63,278

$61,185

Property and equipment

$177,395

$173,089

Less accumulated amortization

-$63,115

-$57,725

$114,280

$114,364

$5,239

$5,589

-$2,864

-$3,046

$2,375

$2,543

$18,102

$19,510

$5,671

$6,149

$203,706

$204,751

Property and equipment:

Property and equipment, net

Property under capital leases:
Property under capital leases
Less accumulated amortization
Property under capital leases, net
Goodwill
Other assets and deferred charges
Total assets

LIABILITIES, REDEEMABLE NON CONTROLLING INTEREST AND EQUITY

Current liabilities:
Short-term borrowings

$1,592

$7,670

Accounts payable

$38,410

$37,415

Accrued liabilities

$19,152

$18,793

Accrued income taxes

$1,021

$966

Long-term debt due within one year

$4,810

$4,103

$287

$309

Obligations under capital leases due within one year

Current liabilities of discontinued operations
Total current liabilities

$89
$65,272

$69,345

$41,086

$41,771

Long-term obligations under capital leases

$2,606

$2,788

Deferred income taxes and other

$8,805

$8,017

Long-term debt

Redeemable non-conrtoling interest

$1,481

Equity:
Common stock

323

$323

$2,462

$2,362

Retained earnings

$85,777

$76,566

Accumulated other comprehensive income (loss)

-$7,168

-$2,996

Total Walmart shareholders equity

$81,394

$76,255

$4,543

$5,084

$85,937

$81,339

$203,706

$204,751

Capital in excess of par value

Nonredeemable non-conrtoling interest

Total Equity
Total liabilities, redeemable non-controlling
interest, and equity

Income Statement
Fiscal Years Ended January 31,
(Amounts in millions)

2015

2014

$482,229

$473,076

$3,422

$3,218

$485,651

$476,294

Revenues:
Net sales
Membership and other income
Total revenues
Costs and expenses:

$365,086

$358,069

$93,418

$91,353

$27,147

$26,872

$2,161

$2,072

Capital leases

$300

$263

Interest income

-$113

-$119

$2,348

$2,216

$24,799

$24,656

Current

$8,504

$8,619

Deferred

-$519

-$514

$7,985

$8105

$16,814

$16551

$285

$144

$17,099

$16695

-$736

-$673

$16,363

$16022

Basic income per common share from continuing operations

attributable to Walmart

$5.01

$4.87

Basic income per common share from discontinued

operations attributable to Walmart

$0.06

$0.03

Basic net income per common share attributable to

Walmart

$5.07

$4.90

Diluted income per common share from continuing

operations attributable to Walmart

$4.99

$4.85

Diluted income per common share from discontinued

operations attributable to Walmart

$0.06

$0.03

Diluted net income per common share attributable to

Walmart

$5.05

$4.88

Cost of sales
Operating, selling, general and administrative expenses
Operating income
Interest:
Debt

Interest, net
Income from continuing operations before income taxes
Provision for income taxes:

Total provision for income taxes

Income from continuing operations
Income from discontinued operations, net of income taxes
Consolidated net income
Less consolidated net income attributable to noncontrolling
interest
Consolidated net income attributable to Walmart
Basic net income per common share:

Diluted net income per common share:

Weighted-average common shares outstanding:

Basic

$3,230

$3269

Diluted

$3,243

$3283

$1.92

$1.88

Dividends declared per common share

Shareholders Equity Statement &

Redeemable Non-controlling Interest
(Amounts in
millions)

Shares

Amount

Retaine
d
Earning
s

Accumul
ated
Other
Compre
hensive
Income
(Loss)

Total
Walmart
Shareho
lders
Equity

NonTotal
redeem Equity
able
Noncontrolin
g
Interest

Redeem
able
Noncont
rolling
Interest

$2,362

$76,566

($2,996)

$76,225

$5,084

$81,339

$1,491

Balance as of
January 31,
2014

$3,223

Consolidated
net income

____

____

____

$16,363

____

$16,363

$736

$17,099

____

Other
comprehensive
income, net of
taxes

____

____

____

____

($4,172)

($4,172)

($546)

($4,718)

____

Cash dividends
declared ($1.92
per share)

____

____

____

($6,185)

____

($6,185)

____

($6,185)

____

($950)

____

($980)

____

($980)

____

____

____

____

____

____

$113

($731)

($618)

$81,394

$4,543

$85,937

Purchase of
Company Stock
Purchase of
redeemable
nonconrolling
interest
Other
comprehensive
income, net of
taxes
Balances of
January 31,
2015

($13)

____

$323

Capital
in
Excess
of Par
Value

($1)

____

($29)

____

$8

$1

$129

($17)

$3,228

$323

$2,462

$85,777

____

-$7,168

($1,491)

____

$____

Statement of Cash Flows

Fiscal Years Ended January 31,
2015

2014

$17,099

$16,695

-$285

-$144

$16,814

$16,551

$9,173

$8,870

-$503

-$279

$785

$938

-$569

-$566

-$1,229

-$1,667

Accounts payable

$2,678

$531

Accrued liabilities

$1,249

$103

$166

-$1,224

$28,564

$23,257

-$12,174

-$13,115

Proceeds from the disposal of property and equipment

$570

$727

Proceeds from the disposal of certain operations

$671

(Amounts in millions)
Cash flows from operating activities:
Consolidated net income
Income from discontinued operations, net of income taxes
Income from continuing operations
Adjustments to reconcile income from continuing operations
to net cash provided by operating activities:
Depreciation and amortization
Deferred income taxes
Other operating activities
Changes in certain assets and liabilities, net of
effects of acquisitions:
Receivables, net
Inventories

Accrued income taxes

Net cash provided by operating activities

Cash flows from investing activities:

Payments for property and equipment

Other investing activities

Net cash used in investing activities

____

-$192

-$138

-$11,125

-$12,526

-$6,288

$911

$5,174

$7,072

Cash flows from financing activities:

Net change in short-term borrowings
Proceeds from issuance of long-term debt

Payments of long-term debt

-$3,904

-$4,968

Dividends paid

-$6,185

-$6,139

Purchase of Company stock

-$1,015

-$6,683

-$600

-$426

-$1,844

-$296

-$409

(260)

-$15,071

(10,789)

Effect of exchange rates on cash and cash equivalents

-$514

-$442

Net increase (decrease) in cash and cash equivalents

$1,854

-$500

Cash and cash equivalents at beginning of year

$7,281

$7,781

Cash and cash equivalents at end of year

$9,135

$7,281

Income taxes paid

8,169

8,641

Interest paid

2,433

2,362

Dividends paid to noncontrolling interest

Purchase of noncontrolling interest
Other financing activities
Net cash used in financing activities

Supplemental disclosure of cash flow information:

Appendix B
Ratio Analysis

Liquidity
Ratio:

(Amounts in millions)

Working Capital

2015

2014

($63,278-$65,272) and ($61,185-$69,345)

-$1994

-$8160

Current ratio

($63,278/$65,272) and ($61,185/$69,345)

0.97

0.88

Cash Ratio

($9,135/$65,272) and ($7,281/$69,345)

0.14

0.10

2015

2014

24.3%

24.3%

0.18

0.19

2015

2014

2.8%

2.5%

-6.2

-6.5

2015

2014

Efficiency
Ratio:

(Amounts in millions)

Gross profit percentage

(/$482,229) and (/$473,076)

Accounts receivable turnover ratio

($1,200/$6,778) ($1,300/$6,667)

Solvency
Ratio:

(Amounts in millions)

Debt Ratio

($203,706/$203,706) and ($204,751/$204,751)

Debt to equity ratio

($203,706.$85,937) and ($204,751/$81,339)

Times-interest-earned ratio

($17,099+($285)+(2,348)/($2,348)) and
($16,695+(144)+($2,216)/$2,216))

Profitability
Ratio:

(Amounts in millions)

Profit margin ratio

($3,726/$114,167) and ($4,359/$119,336)

3.26%

3.65%

Rate of return on total assets

($3,726+($2,348)/$101,381) and ($4,359+

($2,216)/$80,505)

1%

3%

Asset turnover ratio

($114,167/$101,381) and ($119,336/$80,505)

1.13

1.48

Earnings per share

($17,099-/$3,243) (16,695-/$3,283)

$5

$4.9

2015

2014

$15.16

$15.30

3%

3%

38%

38%

Investment Potential
Ratio:
Price/earnings ratio

($75.82/$5) and ($74.99/$4.9)

Dividend yield

($1.92/$75.82) and ($1.88/$74.99)

Dividend payout

($1.92/$5) and ($1.88/$4.9)

Appendix C
Competitive Landscape via hoovers.com

There ended up being limited financial data for Walmart on hoovers.com, but I was able
to compare my own findings with their top competitors.

A financial analysis was performed on the company Walmart. Walmart is publicly

traded and listed on the NYSE. A full work up has been done on all of the Walmarts
Financial Statements and comparisons are available for 2014 and 2015. We will go into
detail on of the liquidity, efficiency, solvency, profitability, and investment potential of
Walmart. A recommendation for investment will also be given.

Liquidity
Walmarts working capital is shown at almost a $2.0 billion (2015) and $8.2 billion
(2014) deficit. Walmart operates at a deficit and when thinking about working capital
most would think that having a deficit would be a negative thing. But in this case it is a
positive, Walmart is able to collect cash from customers up-front, pay returns to
shareholders sooner, and pay payables later.
Walmarts cash ratio is low at 14% (2015) and .10 (2014), this shows us that they
do not have enough cash and cash equivalents to pay off current liabilities if they all
came due. But, the current ratio for Walmart
is nearly 1 for both 2015 and 2014. That tells
us that they are able to pay their short-term
and long-term obligations if they came due,
with their cash, cash equivalents, and other
assets.

Efficiency
In the last 3 years Walmart has held a
consistent gross profit margin of 24.3% this tells us
that out of every $1 Walmart earns, they take home
almost $.25. When comparing Walmart to
competitors ideally we would like to see a higher
percentage. But the company is consistent with their numbers.
Walmart doesnt offer very much credit sales and has receivable turnover ratios of .18
(2015) and .19 (2014). This shows us that Walmart is successful at collecting their accounts
receivable.

Solvency
In our findings Walmart has a debt ratio of 0. In most cases being debt free is a
good thing. But when it comes to looking to invest in a company this can indicate that
the company does not finance through borrowing. Borrowing is important because
shareholders can invest in the companys debt. If there is no debt, this can limit returns
to shareholders when investing in debt.
The debt to equity ratio for Walmart is 2.8% (2015) and 2.5% (2014), again this
shows that the company has taken on little debt. This also shows that the company has

a low debt to equity, and are low risk. When the debt to equity is low so are returns for
investors.
Times interest earned is noted at -6.2 (2015) and -6.5 (2014) this shows that
Walmart is very capable of paying its interest expenses.

Profitability
Walmarts profit margins are 3.26% (2015) and
3.65% (2015) this means that of every $100 that is
earned about $4 is profit. The companys return on
total assets is 1% (2015) and 3% (2014) this tells us
that every $100 that is invested in assets, $1-3 in
income for the year.
With an asset turnover of 1.13 (2015) and 1.48

Im encouraged that Walmarts fiscal 2015

revenue grew by more than $9 billion to
nearly $486 billion and earnings per share
were $4.99, a nearly 3 percent increase from
the prior year. But, we have higher
expectations. Our priority is to run great
stores, clubs and e-commerce everywhere
we operate to grow the business.
- Doug McMillion President and Chief
Executive Officer

(2014) this shows us that the company is using its

assets efficiently.

Investment Potential
Walmart has a price/earnings ratio of $15.16 (2015) and $15.30. So you can count on
paying about $15 for $1 of current earnings when investing. Dividend yields are 3% and
dividend payout of 38% for both 2014 and 2015. This tells us that 38% of net income with go to
dividends and 62% for other operating costs. This results in a pretty good payout for
shareholders.

Earnings Per Share

This year Walmart is taking their remain cash flows to

provide shareholders returns. In 2016 Walmart is paying
$1.96 per share, paid in 4 quarterly installments, this is an
increase of .04 from 2015. In the Solvency section of the

$1.96
$1.94
$1.91

report we can see that Walmart is showing very low debt,

from an investment stand point this is not a good thing.
Shareholders like to see big returns, and investing in the debt

$1.89
$1.86

2016

wouldnt not result in a big return. With that being said I would
advise investing in Walmart equity, because there is free cash flow, and low debt.

2015

2014