Wal-Mart Financial Analysis Report
ACC205: Principles of Accounting
Instructor: Mark Stricklett
November 10, 2014
Wal-Mart Financial Analysis Report
In accounting there is much to be learned, about the financial aspects of a business. In the past five weeks I have learned the importance of financial reports and how they relate to the success of an establishment. These reports may include balance sheets and income statements, which help accountants and the public grasp the overall financial condition of a company. The information in these reports is really significant to, managers, owners, employees, and investors. Managers of a business can take and deduce financial figures from the income statement which details monthly earnings as well as the company’s liabilities and equity position, and even project future yearly budgets.
After looking into several companies, I decided to research Wal-Mart because this store intrigued me from a financial standpoint and my family shops there very frequently. In addition, I really wanted to know where this giant corporation stood financially. As I evaluate Wal-Mart’s financial documents I will exemplify and explain the importance of the horizontal analysis using detailed gauges taken from Wal-Mart’s previous past two years of yearly financial records. I will hone in on Wal-Mart’s last two years, Current Ratio, Quick Ratio, Cash to Current Liabilities Ratio, and lastly I will investigate Wal-Mart’s net liquidity potential. For my final examination I will communicate my thoughts and investment suggestions for potential future investors who want to be stockholders in Wal-Mart.
The first of many things that pondered me was how this huge corporation emerged. Well in the year 1969 a gentleman by the name of Sam Walton had opened several Wal-mart chains. Now this small chain of Wal-marts from 1969 has expanded globally to over eleven thousand stores around the world. Wal-Mart retails a large assortment of merchandise and consumables such as, food, electronics, house ware, health and beauty, jewelry automotive, hardware and miscellaneous other general products.(Wal-Mart, 2012) In examining Wal-marts business aspects they are prearranged into three functioning categories U.S. Wal-mart, International Wal-mart, and Sam’s Club stores. In addition, they have a versatile store format, which includes supercenters, markets, express stores, and a web store online. Wal-marts are located in fifty states around the U.S and are global in other countries such as Japan, Brazil, Canada, just to name a few. Besides Wal-marts merchandise and consumables, they offer other great services such as bill payments, money orders and check cashing is available. I think this was worth mentioning because I see this as a way for Wal-mart to generate more business and revenue. Furthermore, Wal-Mart has its own licensed brands and markets these brands thru private label store brands. (Wal-Mart, 2012)
For every great corporation formed there is always a competitor, one of the biggest competitor that competes with Wal-mart is Target Corporation. Target is established as a store who seeks out the wealthier shoppers, by keeping their prices on a slightly higher scale. One of the reasons why Wal-mart is dominating the market is because; Wal-Mart is facing growing opposition from individuals who simply do not want the store in their communities. Small business mom and pop boutiques would like to see the Wal-Mart retailer be removed from the small cities and towns citing that these stores are “destroying” the look of “Main Street” (Alpha 2012) Now let’s move onto more of the financial aspects of Wal-mart by looking at the horizontal analysis of income statements and balance sheets.
Financial analysts use horizontal analysis to predict differences in operational trends and to pinpoint abnormalities within a business. According to our...
References: Anonymous, (2012) Wal-Mart Web Site, Retrieved from: http://corporate.walmart.com/
Anonymous, (2012) Seeking Alpha, Why Wal-Mart Beats Its Competitors, Retrieved from:
Perr, J. (2012) Daily Kos, Wal-Mart Owners Look to Slash Federal tax Payments, Retrieved
Wainwright, S. (Ed.). (2012). Principles of Accounting: Volume I. San Diego, CA: Bridgepoint Education, Inc. Anonymous, (2012) Wal-Mart Web Site, Retrieved from: http://corporate.walmart.com/
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