Essay About Wal-Mart And Financial Analysis

Wal-Mart 2013 Sec 10-K Annual Reports Analysis Project
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Wal-Mart Stores Inc.
Wal-Mart 2013 SEC 10-K Annual Reports Analysis Project
University of Maryland University College
Acc 310 4025
9/27/2014
Overview
The company I selected to study and prepare a financial analysis is Wal-Mart Store INC. Wal-Mart, (NYSE:WMT) is an American multinational retailer corporation. I chose Wal-Mart because it is the world’s largest retailer, and I like the story and philosophy of Sam Walton (Wal-Mart‘s founder),” the secret of successful retailing is to give your customers what they want. And really if you think about it from point of view of the customers, you want everything: a wide assortment of good quality merchandise; the lowest possible price; guaranteed satisfaction; pleasant shopping experience.” I read the autobiography of Sam Walton. The story of Sam Walton is pretty amazing. He opened the first Wal-Mart in 1962 in Rogers, Arkansas. Wal-Mart is today a global leader in retail, and a number one fortune 500 company in the world. Wal-Mart operates over 11,000 retail units in 27 countries, and employs over 2.2 million associates around the word -1.3 million in the U.S. alone.

Financial Analysis of Wal-Mart Stores Inc. (WMT)
The following is an analysis of the financial reports presented by Wal-Mart in their annual report on form 10-k, for fiscal year ended 31 January 2014. Among other things, the 10-k offers a detailed picture of Wal-Mart‘s business, the operating and financial result for the fiscal year. I followed this annual report as best as possible to complete the four required financial statement, Income statement, consolidated balance sheet, statement of stockholder’s equity, and statement of cash flow.

Income Statement Analysis:
Looking at the Horizontal analysis of the Income Statement for Wal-Mart we can see that they had increases across the board from 2013 to 2014. Net Sales increased by 1.63% from 2013 to 2014. Cost of Goods Sold also increased by 1.64% from 2013 to 2014. This isn’t necessarily a bad thing because they are just trying to keep up with the amount that is being demanded from their customers. This accounts for the increase in Cost of Goods Sold from 2013 to 2014.

Wal-Mart Stores Inc.
Horizontal Analysis of the Income statement
Reported
1/31/2014
1/31/2013
Increase/Decrease
Year 2013
Year 2012
During 2013
In Thousands
In Thousands
Thousands
Percent
Net Sales
476,294,000
468,651,000
7,643,000
1.63%
358,069,000
352,297,000
5,772,000
1.64%
Gross Profit
118,225,000
116,354,000
1,871,000
1.61%
Operating Income
26,872,000
27,725,000
(85,300)
(3.08%)
Net Income from Continuing Operations
16,551,000
17,704,000
(977,000)
(5.51%)
Discontinued Operations
144,000
52,000
92,000
176.92%
Net Income
16,022,000
16,999,000
(977,000)
(5.49%)
Dividends per common share in dollars
18.2%
Looking at the Ratio Analysis of Wal-Mart we see that their Gross Margin ratio is 24.31%. This means that gross profit is 24.31% of net sales for 2014. The Return on Sales ratio is 3.4%. This ratio is used to see how efficient a Company is operating, since Wal-Mart has a below industry normal average percentage here, but since they have such a high volume of sales they are able to operate at this level. Wal-Mart’s Return on Equity ratio is 21.01%. This ratio shows how much profit a company generates with the money shareholders have invested. Wal-Mart’s percentage is pretty good for this ratio they are using the money they get from investors pretty well. The Inventory Turnover Ratio is 7.94 days. This means that on average their inventory stays for about 7.94 days. This is a pretty quick turnover ratio, so they are turning over products fairly quickly.

Wal-Mart Stores Inc.
Ratio Analysis of the Income statement
31-Jan-14
Gross Margin Ratio
24.3%
Gross Profit
Net Sales
Return on Sales
Net Income
Net Sales
Return on Assets
7.83%
Net Income
AVG total assets
Return on Owners Equity
21.01%
(Net Income – Preferred Stock Dividend)
Average Common SE
Inventory Turnover
7.94%
Cost of Goods Sold
Average Inventory
15.99%
(Net Income – Preferred Stock Dividend)
Balance sheet Analysis:
Based on the vertical analysis, or trend, for the 2013 calendar