Detailed Analysis of Walmart Inc.'s Cash Flow System (2016 & 2017)

This report presents an analysis of Walmart Inc.'s cash flow statements for the years 2016 and 2017. It examines the company's cash inflows and outflows from operating, investing, and financing activities. The analysis highlights key sources of cash, such as increases in accounts payable and accrued liabilities, and proceeds from the disposal of property and equipment. The report also details how Walmart utilizes its cash, including payments for accrued income taxes, property and equipment purchases, securities, investments, business acquisitions, short-term and long-term debt repayments, dividends, and share buybacks. Furthermore, the report discusses the impact of exchange rate fluctuations and the overall trend of Walmart's cash balance, concluding with recommendations for improved cash management, focusing on revenue generation and continuous monitoring of financial needs. The report relies on financial data from Walmart's 2017 financial statements and relevant academic research.

Analysis of Wal-mart Inc. cash flow system
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Wal-Mart is a business organization working in service industry. Walmart has stores all over the
country providing services 2 millions of customers. It is a largest retailer in the world having
millions of customer every week. In the present case cash flow statement of the company for the
year 2016 and 2017 is given. From the year and it cash flow statement of the company the inflow
and outflow of cash is provided. Indirect method has been used in order to calculate the cash
flow of the company from operating activities.
The sources from where cash is generated from conducting operating activities in the year 2016
in the form of receivables amounting $19 millions which has been increased in 2017 to $402
million. Accounts payable increased in 2016 by 2008 million dollar and 3942 million dollar
which is a source of cash for the organization. Accrued liabilities have also been increased in
2016 by 1303 million dollar and 1137 million dollar in 2017. Other sources of cash were cash
from other operating activities which was 1410 million dollar in 2016 and 206 million dollar in
2017. Increase of accounts payable and accrued liabilities act as a source of cash for the
organization as nonpayment of these items indirectly save the cash from payment and becomes
an inflow for the organization.
Other sources of cash from investing activities were proceeds of disposal of property and
equipment. Company has received 246 million dollar in 2016 and 662 in 2017. These were some
of the sources from where company has been able to receive cash.
Cash is very necessary for the company to carry on its operation and to apply into various
operations. It is very necessary for the company to use the cash received in legible manner so
that when if it can be received in the form of profit. Walmart is an organisation working in
service industry which takes Paradigm shift very frequently so the company should possess
necessary cash so that it can be used in times of need.
The sources from where the company has use cash received were:
1. Accrued income taxes over paid in cash in 2016 amounting to 472 million dollar.
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2. Company has paid cash for purchasing property and equipment amounting to 11477 million
dollar in 2016 and 10619 in 2017. Purchasing property and equipment is cash applied in
investing activities by the company.
3. Another area where cash has been used by the company was paid for purchasing securities in
2017 amounting to 1901 million dollar.
4. Wal-Mart has also paid cash for making investment and business acquisitions in the year 2017
amounting to 2463 million dollar.
The major parts of cash which the company has used were used in conducting financing activity.
Financing activity is the activity which is performed by the company to finance the operations
undertaken by him. This activity is taken in order to receive cash to be used in performing
business operations. Because the company is a retailer company connecting its operation all over
the world so there will be frequent need of Financing its operations. Along with financing and
receiving cash company also need to pay cash in relation to assist its financing activity.
The areas where company has used cash were:
1. Company has repaid its short term borrowings which has been taken amounting to 1673
million dollar in 2017. The short term borrowings by the company to fulfill its short term finance
requirement which are need to be paid within the given time period.
2. Also the company has used cash for paying its long term debt. Hi cash amount was paid in
2016 amounting to $4,432 million in 2016 and $2,055 million in 2017.
3. Dividend has been paid by the company on the shares issued to the shareholders in both the
year 2016 and 2017. $6,294 million were paid in 2016 and $6,216 paid in 2017.
4. Company is also used its cash in the buyback activity. Buyback of shares is an activity where
the company purchases its own shares from the market which were issued in previous years. For
this the company has to pay cash to its shareholders at the agreed price. $4112 million were paid
in 2016 and $8298 million in 2017. From this it can be shown that the company is undertaking to
purchase its own share and want to reduce the number of ownership of the company.
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5. It has also paid cash in paying dividend for non controlling interest amounting to 719 million
dollar in 2016 and 479 million dollar in 2017. Purchasing non controlling interest the company
has purchased shares of another company in high quantity but the quantity was not such that it
could take control over the other company.
6. The areas where cash was used by the company in carrying other financing activity amounts to
$513 million in 2016 and $255 million in 2017.
Company has also need to paid cash for covering its exchange fluctuation. It has paid $1,022
million in the year 2016 and $452 million in 2017. This activity is activity other than the three
activities presented in the cash flow statement but as the cash is paid therefore it will be shown in
the cash flow statement.
(Wal-mart stores inc. (WMT). 2017)
Company is a high retailer conducting its activity all over the world so it has been in continuous
use of cash to be used to carry its operations. Cash is need to be continuously used it has to Grab
new opportunities in order to generate cash.
From the given about detail it can be shown that the company is under the process of
development and has continuously used its cash in different operations over the year. From the
given above detail it is high amount is paid by the company in comparison to 2016 in 2017. Cash
received by the company as well as cash paid by the company both reflects that the company is
continuously using its cash. Company does not keep its cash in ideal and continuously moves its
liquid cash. The above figure also shows that company Wal-Mart’s net cash provided has been
increased from year 2016/2017 from the previous level. The overall effect of the cash paid in
cash received was that cash balance has been reduced from the previous year 2016. Cash balance
in 2016 was $8,705 million decreased to $6,867 million in 2017.
It is very necessary for the company to use its cash in such a manner that effective result can be
taken. From the given cash flow statement it is shown that company is highly using its cash and
financing activities but along with this it should also develop the areas from where cash can be
received. Some of the sources from where the cash can be received to carry its operations are
issue of shares, taking long term cash loan, sale of Investments and increase in revenue from
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operations. To be regularly focused to fulfill the cash requirement of the company. Company is a
retailer so it should focus on its customer’s requirement so that revenue could be increased and
cash could be generated to be used in order to develop in the market (Kroes, & Manikas, 2014).
It is important to take decision by the company to develop the sources for cash. Without the
availability of cash it is impossible for the company to conduct it activities and developed in the
market so continuous monitoring is necessary so that new areas could be developed from where
cash requirement could be fulfilled (Chen, & Chen, 2012).
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