However, the company will have to switch from last-in first-out (LIFO) inventory valuation to a first-in first-out (FIFO) system, which could conceivably create an appreciable tax liability in the near-term.
8. If Wal-mart uses the cash basis of accounting, how would that differ from the accrual basis?
First, Wal-mart is currently not allowed to conduct its business on a cash accounting basis because it is too large to do so under prevailing IRS rules (Pub. 538) and because it necessarily keeps a significant inventory within its stores and warehouses. And even after it adopts IASD standards, it will operate on an accrual basis.
However, if it were to use cash accounting, its receivables are unlikely to be greatly distorted. As a retailer, Wal-mart deals primarily in electronic transactions that clear within three days;...
0 $0.0 Net income available to common stockholders $17,758.5 $16,468.7 Common dividends $5,400.0 $5,048.0 Addition to retained earnings $12,358.5 $11,420.7 Calculated Data: Operating Performance and Cash Flows 2012 2011 Net operating working capital (NOWC) $1,464.0 ($2,108.0) Total operating capital $144,629.0 $136,320.0 Net Operating Profit After Taxes (NOPAT) $19,182.7 $17,926.7 Net Cash Flow (Net income + Depreciation) $17,758.5 $16,468.7 Operating Cash Flow (OCF) $19,182.7 $17,926.7 Free Cash Flow (FCF) $10,873.7 N/A Calculated Data: Per-share Information 2012 2011 Earnings per share (EPS) $5.26 $4.76 Dividends per share (DPS) $1.60 $1.46 Book value per share (BVPS) $22.63 $20.61 Cash flow per share (CFPS) $5.26 $4.76 Free cash flow per share (FCFPS) $3.22 N/A LIQUIDITY RATIOS (Section 3.2) Industry 2012 2011 Average Liquidity ratios Current Ratio 0.83 0.88 1 Quick Ratio 0.22 0.23 0.3 ASSET Management RATIOS (Section
Financial Analysis of Wal Mart Financial Analysis of Wal-Mart Company Overview Wal-Mart Stores Inc. (WMT) is the largest global retail and chain stores operating in various formats. The company operates more than 8000 stores globally across its business segments, which include electronics, groceries, apparel, and small appliances. Although, Wal-Mart operates a global business, however, more than half of the company businesses are located in the United States. Wal-Mart also operates its global businesses
However, the company saw a reduction in profits during 2008 (fiscal 2009) and only last year was able to restore profitability to previous levels. Target therefore appears to be less recession-proof than Wal-Mart, and this may be related to the latter company's superior geographical diversification. Both companies have healthy balance sheets. Wal-Mart's tight margins meant that it traditionally has what in some companies would be considered poor liquidity (current ratio
Wal-Mart's capital structure is relatively debt-heavy. For the end of fiscal 2008, Target had a debt/equity ratio of 0.4, indicating a capital structure more oriented towards equity financing. Costco had a debt/equity ratio of 1.25, again lower than that of Wal-Mart (MSN Moneycentral, 2010). These competitors provide interesting comparables in that neither is as heavily leveraged as Wal-Mart. They are very large companies with stable cash flow, just like Wal-Mart,
Wal-Mart: Financial Statement Analysis WAL-MART FINANCIAL STATEMENT ANALYSIS Company Description Wal-Mart Stores Inc. (WMT) is a world largest grocery chain and retail stores. The company operates 8000 stores across three business segments which include apparel, groceries, electronics and small appliances. While the company operates globally, half of the company stores are located in the United States. To complete in the international markets, Wal-Mart also operates its business through subsidiaries in Canada, Argentina, China,
Wal-Mart Financial Analysis Wal-Mart Store Inc. is a multinational retailer corporation branded as Wal-Mart in 2008. Founded in 1962, Wal-Mart has now become one of the largest American corporations with chain of retail stores. Wal-Mart sells varieties of consumer goods such as consumer electronics, toys, automobiles, furniture, video games and several other consumers goods. Presently, Wal-Mart enjoys the patronages of 200 million customers per week making the company to record the
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