Ethic And Compliance
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Ethics and Compliance
Walmart enforces a Business ethics and compliance program that helps partners make ethical decisions at work. Walmart invests heavily in the implementation and improvement of the program. Because of this, the company remains listed as one of the most ethical places to work .
Roles and Compliance
From frontline employees to top executives;ethics and compliance both play large roles in Walmarts financial environment. In fact, Walmarts financial integrity is something that it prides itself upon. In its Statement of Ethics, Walmart describes why financial compliance is important (Walmart, 2008). The code also discusses the importance of maintaining accurate financial records and the importance of conforming to generally accepted accounting principles (GAAP). Walmart makes certain that every associate of management is familiar and compliant with its Statement of Ethics. They have online ethical training sessions so that its employees are aware of the companys standing on issues and to help employees make better ethical decisions.
Not only does it see the importance of maintaining accurate records for its own use as it can help make better financial decisions, but they also see the value and necessity of accurate records for their investors and creditors(Walmart, 2008). Consolidated Financial Statements that accurately reflect financial events and transactions allow creditors and investors of Walmart to reach fair rates and better prices. To reach the level of compliance and ethical financial behavior that Walmart has reached, the company has implemented several policies and procedures .
Procedures
Although there are many policies and procedures used to guarantee compliance, there are some major ones worth noting. The first policy requires the use of the audit committee of the board of directors. This audit committee oversees the reporting of financial information. It also regularly reviews the independent auditors and its internal controls and objectivity as well as Walmarts other financial policies and procedures.
Another prominent policies and procedure is in the Code of Ethics for the CEO and Senior Financial Officers. The Code of Ethics establishes five requirements for top executives. The first is that the senior financial officers, and the CEO are responsible for the length, accuracy, timeliness, and comprehensiveness of all financial reports disclosed to the SEC (Walmart, 2008). The second policy establishes the responsibility of all of the above parties to report any instances of fraud (material or not) and any deficiencies in internal controls and disclosure methods. The third policy establishes the responsibility of the above parties to report the breach the Code of Ethics and any conflicts of interest. The fourth policy makes the above parties responsible for reporting any information concerning evidence of securities fraud or other material violations. The final policy gives power to the Audit Committee to enforce any punishment they see fit on violators of the above policies and the Code of Ethics(Walmart, 2008 ).
Financial Markets
The United States Treasury Department defines the United States financial markets as a group of separate markets that service a diverse collection of products and organizations. These products and organizations are served by a range of exchanges, and trading platforms (Financial Markets of The United States, n. d.).Walmart is the largest retailer in the world to be a publically traded company. It has a responsibility to its stakeholders, to use these financial markets to ensure that their business practices are ethical and in compliance with the financial and legal requirements of each of the countries that Walmart operates in .
SEC Regulations
According to their annual report Walmart submits its financial statements to the SEC. Walmarts financial performance for fiscal year 2011 was a very strong and solid one. “Walmart increased their net sales by 3.4% to $419 billion and operating income by 6.4% to more than $25 billion”.A rise in the earnings per share to $4.18 was an increase of over 10% for operations.Through it all they are consistent in the return on investment of more than 19%. “It closed out 2011 with almost $11 billion in free cash flow. It returned a record $19.2 billion to shareholders through dividends and share repurchases” (Walmart 2012 Annual Report).
For the past two years Walmart has surpassed the budgeted expenses on the operation plan. A high growth rate has been reflected in Walmarts financial prosperity. “The company has added 52.2 million square feet through 1,160 additional units, including acquisitions in the U.K. and South Africa”. This corporation maintains high return on equitywith $11.3 billion in dividends and stock trades during the year. The Walmart organization concentrates on continual progress, and they are making positive strides towards success.
Financial Performance
Using financial ratios illustrates the financial health of an organization. Finding the liquidity shows how quickly a business can turn assets into cash to pay debts in the event of a crisis. Assessing assets from debt can show dependability. Return on equity can instill confidence with investors. The days receivable ratio gives insight of how well a company can pay its bills. Walmarts financials can be analyzed with the following information.
To determine how liquid the company is it most refers to the current ratio test. This is done by taking the current assets and dividing it by current liabilities. By looking at Walmarts current balance sheet its current assets were $54,975 billion and the current liabilities are$62,300 billion (Walmart, 2012). Walmarts liquidity is .88 cent. This means it has .88 cents per dollar in assets for each dollar it has financed. Unfortunately, this also means it would not be able to liquidate enough to pay off all debts. However,it is possible to operate with such a low ratio simply because the turn-over rate for the inventory is at a high enough rates that invoices can get paid on time