Walmart Income Statement
Analysis of Wal-Mart Income Statement 2009-2011
Broad Overview
Wal-Mart operates retail stores classified into the three categories of Walmart U.S., Walmart International, and Sam's Club. International sales account for 26% of net sales, while Sam's Club is just 11.8% (Walmart, 2012, p. 17). An initial perusal of Wal-Mart's income statement evidences the staggering scale of its retailing operations. In 2011, revenues from both retail receipts and club memberships rose 4.3%, over 2009 figures, to nearly 422 billion (USD). Operating income demonstrates a steady incremental increase reflective of consistent management and cost control practices. Lastly, the income from continuing operations reflects a consistent incremental increase with each passing year.
Based upon a general overview of the Walmart income statement, it appears that the firm is financially healthy and consistently capturing accounting profits. Review of the accompanying notes reveals that Walmart does not include the costs of their warehouse and distribution facilities in their cost of sales, therefore benchmarking their gross profit margin to competitors may present a skewed view of the firm (Walmart, 2012, p. 36).
2009-2011 Yearly Analysis
Initial reviews of net sales highlights that retail receipts are increasing; yet membership, and other income, is waning. Net sales comprise less than 1% of overall revenues, however the decline may be indicative of changing customer buying habits or some other shift in the market. In 2009, membership income totaled 3.167 billion (USD) of revenues, but has declined nearly 8.5% to 2.897 billion (USD) in 2011.
The areas representing the most variation relate to discontinued operations and income taxes. Discontinued operations increased income by 146 million (USD) in 2009, decreased it by 79 million (USD) in 2010, and increased it by 1,034 million (USD) in 2011. The affect of such dramatic variance from shutting down particular activities and sale of the corresponding resources ripples through the income statement to increase, or decrease, the earnings per share for each year. While the continuing operations of Walmart demonstrate an admirable consistency, the firm continues to experiment with new stores, markets, and product services that do not always prove profitable or sustainable. The notes to their annual report indicate that the discontinued operations were related to a venture in Germany (Walmart, 2012, p. 45).
The tax section of the income statement represents the second area of notable variance. In 2009, current taxes represented 31.45% of income from operations, yet the effect of deferred taxes increased the effective rate to 34.18%. Similarly in 2010, current taxes accounted for 34.55% of income from operations, and the effect of deferred taxes…
Wal-Mart is also deemed to be a company that greatly mistreats and discriminates against its employees but there has apparently been no reliable empirical data to back that up (Van Riper, 2008). The article concludes by conceding to some Wal-Mart critics. First, Wal-Mart cites Ohio University professor Richard Vedder, who points out that Bureau of Labor Statistics Data holds that Wal-Mart's wage structure lags behind the retail sector as a
Indeed, the retailer's current ratio has not exceeded 1.0 in recent times. It is however important to note that given its profitability, it is likely that Wal-Mart converts its inventory into cash at a rate that is much faster than that of its peers in the same industry. For this reason, it is highly unlikely that in the normal course of doing business, the retailer could encounter challenges paying
The Price-Sensitive Affluents, Wal-Mart has learned (Wal-Mart Annual Reports) is more interested in finding an exceptionally good deal and not necessarily concerned about the shopping experience. This is particularly true as one of the strongest factors influencing the execution of their strategy, the emerging global recession during this timeframe, takes hold. Again as with the Price Value Shopper and the paradoxical purchasing patterns of the Brand Aspirational segment show,
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