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Walmart Target Financial Analysis

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Subject
Accounting
School
University of Miami
Type
Homework
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The corporations I have selected for analysis are:
Corporation 1: WALMART INC.
Date of Financial Statement Used: January 31, 2020
Corporation 2: TARGET CORP.
Date of Financial Statement Used: January 31, 2020
Main business characteristics of Walmart and Target are both low-cost retail stores with
gigantic revenues. They are definitely very solid businesses but slow growers. I think the
main reason for their slow growth is their mammoth size.
Both Walmart and target will definitely be good businesses in the nest 5 or 10 years. This is
primarily due to the fact that they sell basic necessities and grocery items, which will never
go out of demand. Their current business models may change with larger revenues coming
from online sales instead of brick-and-mortar stores.
Quantitative Analysis Operational Considerations
1) Compare Sale / Revenues growth trend
Corporation 1: WALMART INC.
12 months ended
Jan 31,
2020
Jan 31,
2019
Jan 31,
2018
Jan 31,
2017
Jan 31,
2016
Sales / Revenue (in Millions of US $)
523,964
514,405
500,343
485,873
482,130
% growth
1.9%
2.8%
3.0%
0.8%
Corporation 2: TARGET CORP.
12 months ended
Jan 31,
2020
Jan 31,
2019
Jan 31,
2018
Jan 31,
2017
Jan 31,
2016
Sales / Revenue (in Millions of US $)
78112
75356
72714
70271
73785
% growth
3.7%
3.6%
3.5%
-4.8%
Among the two corporations, there is not very significant sales growth difference, but still
Target seems to have a healthier growth trend. They seem to grow at around 3.5% each year,
while Walmart growth rate is around 2-2.5%. Walmart has mammoth revenue, almost 6.7
times that of target. It came in at $524 billion in fiscal 2020. Its size is also a weakness, as
sales growth was a tepid 2%. Achieving substantial growth seems difficult for such a large
company.
Walmart seem to be more focused on sales revenue with lowest price offerings, on the other
hand Target is focused on profit margins, which is why they are able to post lower revenues

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but higher profit margins. To increase sales revenue, Target can try to lower its margins and
increase revenue for bargain purchasers.
2) Vertical Analysis - Gross Profit, Expense ratio and Net Profit Margin
Corporation 1: WALMART INC.
Consolidated Income Statement
US$ in millions
12 months ended
Jan 31,
2020
Jan 31,
2019
%
Revenue
5,23,964
5,14,405
100.0%
Cost of sales
3,94,605
3,85,301
74.9%
Gross profit
1,29,359
1,29,104
25.1%
Operating, selling, general and administrative
expenses
1,08,791
1,07,147
20.8%
Operating income
20,568
21,957
4.3%
Non-Operating Income / Expenses
(452)
(10,497)
-2.0%
Earnings Before Taxes
20,116
11,460
2.2%
Income Tax Expenses
4,915
4,281
0.8%
Net Income
15,201
7,179
1.4%
Corporation 2: TARGET CORP.
Consolidated Income Statement
US$ in millions
12 months ended
Jan 31,
2020
%
Jan 31,
2019
%
Revenue
78,112
100.0%
75,356
100.0%
Cost of sales
54,864
70.2%
53,299
70.7%
Gross profit
23,248
29.8%
22,057
29.3%
Selling, general and administrative
expenses
16,233
20.8%
15,140
20.1%
Other operating expenses
2,357
3.0%
2,807
3.7%
Operating income
4,658
6.0%
4,110
5.5%
Non-Operating Income / Expenses
(468)
-0.6%
(434)
-0.6%
Earnings Before Taxes
4,190
5.4%
3,676
4.9%
Income Tax Expenses
921
1.2%
746
1.0%
Net Income
3,269
4.2%
2,930
3.9%
In terms of profit margins Target have better control of its operations. They have higher gross
profit margin and net profit margin. Even though the selling, general and administrative
expenses ratio is same for both companies, Target Corp has lesser total expense ratio as
compared to Walmart Inc.

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The corporations I have selected for analysis are: Corporation 1: WALMART INC. Date of Financial Statement Used: January 31, 2020 Corporation 2: TARGET CORP. Date of Financial Statement Used: January 31, 2020 Main business characteristics of Walmart and Target are both low-cost retail stores with gigantic revenues. They are definitely very solid businesses but slow growers. I think the main reason for their slow growth is their mammoth size. Both Walmart and target will definitely be good businesses in the nest 5 or 10 years. This is primarily due to the fact that they sell basic necessities and grocery items, which will never go out of demand. Their current business models may change with larger revenues coming from online sales instead of brick-and-mortar stores. Quantitative Analysis – Operational Considerations 1) Compare Sale / Revenues growth trend Corporation 1: WALMART INC. 12 months ended Sales / Revenue (in Millions of US $) % growth Corporation 2: Jan 31, 2020 523,964 1.9% Jan 31, 2019 514,405 2.8% Jan 31, 2018 500,343 3.0% Jan 31, 2017 485,873 0.8% Jan 31, 2016 482,130 Jan 31, 2018 72714 3.5% Jan 31, 2017 70271 -4.8% Jan 31, 2016 73785 TARGET CORP. 12 months ended Sales / Revenue (in Millions of US $) % growth Jan 31, 2020 78112 3.7% Jan 31, 2019 75356 3.6% Among the two corporations, there is not very significant sales growth difference, but still Target seems to have a healthier growth trend. They seem to grow at around 3.5% each year, ...
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