Wal-Mart Stores Inc. (WMT) Income Statement Period Ending Total Revenue Cost of
ID: 2528304 • Letter: W
Question
Wal-Mart Stores Inc. (WMT) Income Statement Period Ending Total Revenue Cost of Revenue Jan 31, 2010 408,214,000 304,657,000 103,557,000 Jan 31, 2009 404,374,000 304,056,000 100,318,000 Gross Profit Operating Expenses Research Development Selling General and Administrative Non Recurring Others 79,607,000 77,520,000 Total Operating Expenses Operating Income or Loss 23,950,000 22,798,000 Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Minority Interest Net Income From Continuing Ops 181,000 24,131,000 2,065,000 22,066,000 7,139,000 (513,000) 14,927,000 284,000 23,082,000 2,184,000 20,898,000 7,145,000 (499,000) 13,753,000 (79,000) 146,000 Non-recurring Events Discontinued Operations Extraordinary Items Effect of Accounting Changes Other Items 14,335,000 13,400,000 Net Income Preferred Stock And Other Adjustments Net Income Applicable To Common Shares 14,335,000 13,400,000Explanation / Answer
1) Comment on EPS performance Earnings per share serves as an indicator of a company's profitability. EPS is calculated as: EPS = (Net Income - Dividends on Preferred Stock) / Average Outstanding Shares Year 2010 2009 Net income 1,43,35,000 1,34,00,000 Average outstanding shares 3,78,000 3,93,000 EPS 37.92 34.10 EPS per share increased from 34.1 to 37.92 is good sign 2) Analysis of capital structure Other Stock holders equity (debt portion) they are decreasing from -2688000 to -70000 is positive view Purchase of stock in cashflow relecting -3521000 & -7712000 is a good sign because they are buybacking extra stocks/shares 4) What is the short-term and long-term strategy of the company? Is there adequate planning and resources for their plans? For Long term Plans They are invested in new Plant &Machinery from 95653000 to 102307000 Goodwill also increasing from 15260000 to 16126000 For short term Plans They are having sufficient cash& inventory to continue business 5) Evaluate the company’s overall value Other possible suggestions: 1) Are they positioned for long-term growth as well as short-term opportunities? Yes 2) Comment on dividend policy They are following stable dividend policy 3) What is the current debt status? they are raising more debt because equity Qty is going low debt equity ratio is increasing when compared to last year 4) Analyze the company’s cash flows Inventory increased more when compared to last year from -220,000 to 2,265,000 Capital expeniture increased like last year more buyback of shares from 3521000 to 7712000 repaying of borrowings reduced from 2918000 to 1866000 gain on forign exchange in the current year when compared to loss In last year (-781000 to 194000) 5) Evaluate profitability relative to sales, assets, equity and share value Year 2,010 2,009 Net income 1,43,35,000 1,34,00,000 Average outstanding shares 3,78,000 3,93,000 EPS 37.92 34.10 The asset turnover ratio is calculated by dividing net sales by average total assets. Sales data not given for calcualting ratios 6) Assess liquidity / risk Year 2,010 2,009 Current assets 4,83,31,000 4,89,49,000 Less: Inventory 3,31,60,000 3,45,11,000 Current assets (net) 1,51,71,000 1,44,38,000 Current Liabilities 5,55,61,000 5,53,90,000 Liquid ratio(CA/CL) 0.27 0.26 When compared to last year liquidity increased is recommended 7) Analyze inventory management Year 2,010 2,009 Inventory 3,31,60,000 3,45,11,000 Optimum level only because no data given for turn over
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