Essay: Financial

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Financial Overview

Business Description

Wal-Mart "operates retail stores in various formats around the world and is committed to saving people money" as a business strategy (Wal-Mart 2012 Annual Report). The company operates three main segments, Wal-Mart U.S., Sam's Club and Wal-Mart International. Of these, Wal-Mart U.S. accounts for 59.5% of its total revenues, Wal-Mart International accounts for 28.4% of total sales and Sam's Club accounts for 12.1%. Wal-Mart's total revenues are $443 billion. The company is by far the largest player in the retail industry globally, although this industry is extremely fragmented. Wal-Mart has a dominant share in the United States, and dominates a number of individual product segments, such as groceries. It is also one of the largest online retailers, trailing only companies like Amazon and Apple. Part of Wal-Mart's success lies in its successful execution of the cost leadership strategy, its high volume, and the high level of product and geographic diversification that it has compared with many of its closest competitors. Major retail competitors like Target and Costco, for example, operate in far fewer countries than Wal-Mart and carry narrower product lines.

Financial Analysis

RATIO ANALYSIS (Section 3.1)

Input Data:

2012

2011

Year-end common stock price

$68.23

$59.76

Year-end shares outstanding (in millions)

3,374

3,460

Tax rate

31%

33%

After-tax cost of capital

3.5%

3.5%

Lease payments

$288

$277

Required sinking fund payments

$0

$0

Balance Sheets

(in millions of dollars)

Assets

2012

2011

Cash and equivalents

$7,781

$6,003

Prepaid Expenses & other

$1,588

$2,321

Accounts receivable

$6,768

$5,937

Inventories

$43,803

$40,714

Total current assets

$59,940

$54,975

Net plant and equipment

$143,165

$138,428

Total assets

$203,105

$193,403

Liabilities and equity

Accounts payable

$38,080

$36,608

Notes payable

$14,930

$7,538

Accruals

$18,808

$18,154

Total current liabilities

$71,818

$62,300

Long-term bonds

$54,944

$59,791

Total liabilities

$126,762

$122,091

Preferred stock (400,000 shares)

$0

$0

Common stock (50,000,000 shares)

$332

$342

Retained earnings

$76,011

$70,973

Total common equity

$76,343

$71,315

Total liabilities and equity

$203,105

$193,406

Income Statements

(in millions of dollars)

2012

2011

Net sales

$469,162.0

$446,950.0

Operating costs

$441,361.0

$420,392.0

Earnings before interest, taxes, depr. & amort. (EBITDA)

$27,801.0

$26,558.0

Depreciation

$0.0

$0.0

Amortization

$0.0

$0.0

Depreciation and amortization

$0.0

$0.0

Earnings before interest and taxes (EBIT)

$27,801.0

$26,558.0

Less interest

$2,064.0

$2,160.0

Earnings before taxes (EBT)

$25,737.0

$24,398.0

Taxes

$7,978.5

$7,929.4

Net income before preferred dividends

$17,758.5

$16,468.7

Preferred dividends… [END OF PREVIEW]

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https://www.essaytown.com/subjects/paper/financial-overview/8624188.