Detailed Financial Analysis and Performance Evaluation of Walmart

This report provides a comprehensive financial analysis of Walmart, examining its revenue, profitability, solvency, and gearing ratio. The analysis is based on Walmart's financial data, including its annual report, with comparisons of key financial metrics such as revenue growth, dividend declarations, and asset values. The report also evaluates the company's efficiency, capital structure, and break-even point. It further discusses Walmart's market position, shareholder returns, and the impact of economic conditions on its share price. The report concludes with recommendations for Walmart, including expanding its e-commerce sector and maintaining its market leadership, noting that Desklib provides access to similar past papers and solved assignments for students.

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Date: 23 April ,2018

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Contents
Introduction..........................……………………………………………………………………....2
Analysis........................................…………………………………………………………........3
Conclusion ……………………………………………………………….....................................8
References.........................................................................................................10
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Introduction
Walmart is one of the largest companies of the world that is based on a chain of super markets
in which they offer variety of products to the consumer. It began its operation in 1969. It is the world’s
largest company in terms of revenue as per the Fortune 500 List, the company makes large amount of
profit given its brand value and standing. Walmart has started its operations as a small outlet that
provided discounted products to the customer and later was converted into thousands of outlets all
over the world. The company also provides variety of products through its ecommerce website. The
company functions in three categories around the world retail, wholesale and others. It has expanded its
operations to various other countries also. It also provides access to ecommerce website and services to
people all around the world (Alexander, 2016). The global environment in which the company operates
is dominated by its insane presence where the company operates at the top of the ladder. There are
other retail outlets and other supermarkets also that functions in the same regions, but Walmart has an
upper hand given its decent start and providing quality products to the customers around the world. The
main points that leads to the success of the company is that it keeps changing its products depending
upon the region in which it is operating and the services that it is providing. The company is also
responsible to give back to the environment with the aim of corporate social responsibility and global
growth and development. It is important for it to follow an environment friendly approach and give it
back to the society by making sure that it is performing its corporate social responsibility to the best of
its limit (Belton, 2017). The company aims to provide better opportunity, sustainability and community
growth in areas that is not only beneficial to the company but also creates shared growth for its
customers and other related parties. The company aims to integrate its corporate social responsibility
with its core values and operations that would contribute to the growth of the nation as a whole. It
believes in giving back to the nation in which it is functioning. There have been legalities that the
companies need to follow with respect to social responsibility and growth for the people that work for
the company and the society that is responsible for its development (Kew & Stredwick, 2017).
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Analysis
a. Walmart has been termed as the world’s largest company in terms of revenue as per the
Fortune 500 List. In the last fiscal year the company reached a $500 billion in terms of revenue
and that was the first for the company. Walmart U.S. showed the highest growth in nine years in
terms of revenue and the ecommerce sector grew by 44 percent. The overall revenue was
$500,343 and the dividend declared was 2.04 per share. The total assets for the company are
$204,522 million. So hence it can be seen that there has been significant amount of growth in
the total amount of revenue for the company and the company has been making great profit
from its operations (Laursen & Thorlund, 2016). The future prospects also seem to be viable
enough given the strong market position of the company and the interest of the stakeholders in
investing it. The shareholders and investors are getting due returns for their investments in the
company and that contributed to the overall growth of the company. Hence in terms of
profitability the company is doing tremendously well.
b. The overall efficiency of the organization can be deciphered from the fact that is the world’s
largest company in terms of revenue and have been providing great amount of returns to its
shareholders. There has been tremendous growth in the overall profitability of the company since past
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years and this is contributed by the fact that the company has world class facilities that it provides to its
stakeholders and has made sure that the members get their dues. The core objectives of the company
are defined as per the needs of the society and people it works for (Minnis & Sutherland, 2017). All this
contributes on a healthy note to the growth of the company as one of the world’s largest organization.
As per the CEO, the factors that have made the success of the company possible is its undying efforts
and contribution that it puts in the growth of each and every segment that it deals in and the properties
that it excel that is very different from many other companies functioning in the same sector. With this
kind of attitude, work system and effort the company will keep growing in times to come and contribute
tremendously to its development.
c.The solvency of any company is judged on the basis of the capital structure of the company. It
is checked whether the company is having effective amount of assets that would help in paying of its
liabilities. In case of Walmart the equity position of the company is very string given the fact that the
company invests in various sector that helps in balancing the total amount of assets with the
liabilities and its equity position. The company has fewer amounts of debts and most of its
investment comes from equity holding of its investors (Maynard, 2017). The company has been
listed on the New York stock exchange and the current share price of the company is $86.98 USD.
Recently there has been fluctuations in the share price but that is largely due to the fact that there
has been fluctuating economic conditions, but overall it provides great amount of returns to its
investors in terms of hefty dividends.
d. Gearing ratio helps in defining the present capital structure of the company in terms of the total
amount of debts in comparison to the total amount of equity that the company has. It indicates
the level of financial risk that the company is subjected to, as excess amount of debts would
lead to financial difficulties in the future. Companies that have high amount of debts are highly
geared and vice versa. In case of Walmart the company is having low amount of debts in
comparison to its equity, which means that the company has short geared debts, which means
that the level of financial risks are low for the company. It means that the company will face
fewer difficulties when the profit will fall or the interest rates will rise. The company is having
$36,825 million of debts in comparison to $77,869 equity. This makes it very promising for the
company in terms of its overall liquidity position in the market (Visinescu, et al., 2017).
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1. 3.Break even analysis helps in finding a point where the company will be able to recover all its
cost and there will be no profit and no loss. This is done basically when the company has just
started or when the company has started with a new project, to understand how feasible the
project will be and at what point will the company be able to recover all its expenses and
henceforth make profit. In this method the total fixed and variable cost are compared with the
total amount of sales amount to reach a point where the company makes no profit and loss and
is able to recover all its expenses. In case of Walmart the breakeven point of the company can
be easily calculated by comparing the total amount of sales with the total amount of expenses
for the company and reaching a point where the company makes no profit and no loss (Werner,
2017). It can be calculated by taking the expenses figures from the income statement and the
sales figure from the same and then comparing the two to reach a neutral point known as the
break-even point for the company. It is feasible to obtain the breakeven point from the financial
data that the company has to offer. In case of a new project the break even can be calculated on
the basis of the budget and the forecast of the company. Break even analysis helps in finding a
point where the company will be able to recover all its cost and there will be no profit and no
loss. This is done basically when the company has just started or when the company has started
with a new project, to understand how feasible the project will be and at what point will the
company be able to recover all its expenses and henceforth make profit. In this method the total
fixed and variable cost are compared with the total amount of sales amount to reach a point
where the company makes no profit and loss and is able to recover all its expenses. The break
even analysis is a very good concept as it will help the companies in taking decisions whether
any project is feasible or not and the amount of time that it will take to reach a point where the
company can recover its expenses and earn profit (Werner, 2017). So this is a very important
tool for organizations all around the world. In case of Walmart the breakeven point of the
company can be easily calculated by comparing the total amount of sales with the total amount
of expenses for the company and reaching a point where the company makes no profit and no
loss. It can be calculated by taking the expenses figures from the income statement and the
sales figure from the same and then comparing the two to reach a neutral point known as the
break-even point for the company. It is feasible to obtain the breakeven point from the financial
data that the company has to offer. In case of a new project the break even can be calculated on
the basis of the budget and the forecast of the company.
The annual report of the company can be found here :
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http://s2.q4cdn.com/056532643/files/doc_financials/2018/annual/WMT-2018_Annual-
Report.pdf
Conclusion and Recommendations
Walmart has been performing well, given its huge net worth and the overall growth that the
company has reflected in recent times. The company has expanded to many countries and has been
able to develop it as a brand that makes great amount of revenue by providing quality services to its
customers. In recent times it can be seen that the share price of the company has been falling due to
recent changes in the economic conditions so the company should keep a note of it and try to take
necessary steps that will change these scenarios for the company. On every level it can be said that
the company is one of the biggest giants in the business world and all that it needs to do is to live up
to this expectation of being the best in its field (Bromwich & Scapens, 2016). The company should
expand more to areas it has not been able to, should bring more varieties and should try to explore
its ecommerce sector, the world is online and more than retail outlets people prefer buying
products over the internet and hence the company should focus more on its growth. The company
cannot take it lightly and ignore the impact that it has on the people of today. So it should take steps
to develop its e-commerce sector and contribute to its growth with some great ideas and expert
help. Overall the future of the company seems bright and all that it will take is to maintain the
current position and contribute immensely for more development in times to come.
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References
Alexander, F., 2016. The Changing Face of Accountability. The Journal of Higher Education, 71(4), pp.
411-431.
Belton, P., 2017. Competitive Strategy: Creating and Sustaining Superior Performance. London: Macat
International ltd.
Bromwich, M. & Scapens, R., 2016. Management Accounting Research: 25 years on. Management
Accounting Research, Volume 31, pp. 1-9.
Kew, J. & Stredwick, J., 2017. Business Environment: Managing in a Strategic Context. second ed.
London: Chartered Institute of Personnel and Development.
Laursen, G. & Thorlund, J., 2016. Business Analytics for Managers: Taking Business Intelligence Beyond
Reporting. Second ed. CANADA: Wiley Publisher.
Maynard, J., 2017. Financial Accounting, Reporting, and Analysis. SECOND ed. s.l.:Oxford University
Press.
Minnis, M. & Sutherland, A., 2017. Financial Statements as Monitoring Mechanisms: Evidence from
Small Commercial Loans. Journal of Accounting Research, 55(1), pp. 197-233.
Visinescu, L., Jones, M. & Sidorova, A., 2017. Improving Decision Quality: The Role of Business
Intelligence. Journal of Computer Information Systems, 57(1), pp. 58-66.
Werner, M., 2017. Financial process mining - Accounting data structure dependent control flow
inference. International Journal of Accounting Information Systems, Volume 25, pp. 57-80.
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