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ACC 205 Week 5 Final Paper Financial Analysis of Wal-Mart

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Wal-Mart Analysis
ACC 205 Week 5 Final Paper Financial Analysis of Wal-Mart
Focus of the Final Paper
Write a five-to seven-page financial statement analysis of a public company, formatted according to APA style as
outlined in the Ashford Writing Center. In this analysis you will discuss the financial health of this company with the
ultimate goal of making a recommendation to other investors. Your paper should consist of the following sections:
introduction, company overview, horizontal analysis, ratio analysis, final recommendation, and conclusions. Your
paper needs to include a minimum of two scholarly resources in addition to the textbook as references.
Here is a breakdown of the sections within the body of the assignment:
Company Overview
Provide a brief overview of your company (one to two paragraphs at most). What industry is it in? What are its main
products or services? Who are its competitors?
Horizontal Analysis of Income Statement and Balance Sheet
Prepare a three-year horizontal analysis of the income statement and balance sheet of your selected company.
Discuss the importance and meaning of horizontal analysis. Discuss both the positive and negative trends presented
in your company.
Ratio Analysis
Calculate the current ratio, quick ratio, cash to current liabilities ratio, over a two-year period. Discuss and interpret
the ratios that you calculated. Discuss potential liquidity issues based on your calculations of the current and quick
ratios. Are there any factors that could be erroneously influencing the results of the ratios? Discuss liquidity issues of
competitive companies within the same industry.
Recommendation
Based on your analysis would you recommend an individual invest in this company? What strengths do you see?
What risks do you see? It is perfectly acceptable to state that you would recommend avoiding this company as long
as you provide support for your position.
Abstract
The purpose is to present the financial analysis of Wal-Mart Stores Inc. To analyze the financial
position data for the year ended Jan 2012 and Jan 2011 has been used. For this purpose the
horizontal and ratio analysis techniques have been used.
Company Overview
WMT is the symbol of Wal-Mart listed in NYSE in 1972. However, it was founded in 1962 by
Sam Walton. It is the largest company in the discount variety store sector; it has around more
than 8000 stores. Its total revenue stood at $464 billion. The total revenue of the company is

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around $187 billion more than its three competitors combined sales revenue for the year 2011.
The combined sales revenue of Carrefour SA, Costco and Target is around $277 billion.
Horizontal Analysis
Comparing two years financial statements or comparing one company’s financial statements with
other company is called horizontal analysis. If you are comparing sales of two years you will
find the difference in sales between two years in % as well as in $.
Wal-Mart Stores Inc. WMT %Change %Change
Income Statement
2012/2011 2011/2010
All figures in billions of dollars
30-Jan-12 30-Jan-11 30-Jan-10
Horizontal Analysis for 3 years
Sales
$
446.95
$
421.85
$
408.09 5.95% 3.37%
less cost of goods sold
$
(335.13)
$
(314.95)
$
(304.11) 6.41% 3.56%
Gross Profit
$
111.82
$
106.90
$
103.98 4.60% 2.81%
Operating expenses
SG&A
$
(85.27)
$
(81.36)
$
(79.98) 4.80% 1.73%
Operating income
$
26.56
$
25.54
$
24.00 3.98% 6.42%
Other Income/Expense
$
0.16
$
0.20
$
0.18 -19.40% 11.05%
EBIT
$
26.72
$
25.74
$
24.18 3.80% 6.45%
Interest expense
$
(2.32)
$
(2.21)
$
(2.07) 4.98% 6.76%
EBT
$
24.40
$
23.53
$
22.11 3.68% 6.42%
income
$
(7.94)
$
(7.58)
$
(7.16) 4.82% 5.91%
Minority interest
$
(0.69)
$
(0.60)
$
(0.51) 13.91% 17.74%
Net income from continued
operation
$
15.77
$
15.35
$
14.44 2.72% 6.27%
discontinued operation $ $ $ -106.50% -1403.80%

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(0.07) 1.03 (0.08)
Net income
$
15.70
$
16.38
$
14.37 -4.15% 14.03%
The above analysis of income statement has been made for three years, first the comparison is
between 2012 and 2011 and then 2011 and 2010. The above analysis shows that the net income
has gone down in the year 2012 by around 4% as compared to 2011, while it had gone up by
around 14% in 2011 as compared to 2010. Despite a good increase in sales in 2012 as compared
to 2011, the increase in cost of goods sold was higher in 2012 as compared to 2011, which could
not converted the increase in sales in better net income. The increase in operating expense was
around 5% in 2012 as compared to 2011, while it was around 2% in 2011 as compared to 2010.
It was also one of the main reasons for lower net income in 2012 as compared to 2011.
Wal-Mart Stores Inc. WMT
%Chang
e
%Chang
e
Balance Sheet
2012/201
1
2011/201
0
All figures in billions of dollars
30-Jan-12 30-Jan-11 30-Jan-10
Horizontal Analysis for 3 years
Assets
Current Assets
Cash and Cash Equivalents
$
6.55
$
7.40
$
7.91
-
11.43% -6.48%
Net Receivables
$
5.94
$
5.09
$
4.14 16.66% 22.80%
Inventory
$
40.71
$
36.44
$
32.71 11.74% 11.38%
Other Current Assets
$
1.77
$
3.09
$
3.27
-
42.61% -5.42%
Total Current Assets
$
54.98
$
52.01
$
48.03 5.70% 8.29%
Property Plant and Equipment
$
112.32
$
107.88 $ 102.31 4.12% 5.45%
Goodwill
$
20.65
$
16.76
$
16.13 23.19% 3.95%
Other Assets $ $ $ 32.14% 4.74%

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