Wal Mart Inc 1 Financial Analysis Wal Mart Inc 2 Wal Mart Stores Incorporated operates chain of retail stores in USA as well as outside the USA The first Wal Mart store was opened by Sam Walton in Arkansas in USA in 1962 Within a span of five years he opened more stores and he number increased to 24 stores across Arkansas The incorporation of Wal Mart Stores Incorporated was done in 1969 Wal Mart grew in the United States of America by opening of more stores in to the country The company not only opened the stores across Arkansas but also across the United States of America Wal Mart Corporate 2010 Wal Mart was opposed by the unorganized retail business holders in the USA as their business was affected by opening Wal Mart stores The company also opened its first store outside the USA in South America in 1995 Wal Mart wanted to spread itself not only to the USA but in other countries as well In 2006 the company was having 3800 stores in USA and more than 2980 stores outside USA making it one of the largest retail chains in the world This corporation was also having a vision to establish itself in to a global entity Wal Mart was one of the first companies to operate in the organized retail sector Fishman 2006 The modes of entry used by the company were different for different countries Wal Mart used the mode of entry in to various countries according to the rules and regulations prevailing in to that country Wal Mart Stores Inc Financial Statement 2010 The sales of the company for the financial year ending in January 2010 are 413 8 billion dollars and income for the same period is 14 7 billion dollars The quarterly sales growth for the company has been 5 90 while the industry average is 6 80 The five year annual growth in the sales of the company has been recorded at 7 50 while five year annual growth of income is 6 58 By analyzing the financial statements of Wal Wal Mart Inc 3 Mart Incorporated we find that debt equity ratio of Wal Mart is 0 71 on 31st January 2010 which is 0 68 for the industry It means the proportion of debt of the company in its capital structure is lesser than the equity The company is less leveraged so the interest burden on the company is minimal Wal Mart has capacity to borrow from the market for its CAPEX in the future The interest coverage ratio is 13 times in January 2010 which is 21 9 for the industry Wal Mart needs to improve profitability to improve interest coverage ratio for the reduction of risk of the lenders of the company Wal Mart Stores Inc Financial Statement 2010 The total revenues received by the organization in the year ending January 2010 were 408 2 billion whereas revenues in the year ending January 2009 were 404 3 billion dollars The revenues in the year ending January 2008 stood at 377 billion dollars Thus it can be easily analyzed that the total revenues of the organization has grown over the years steadily This has also impacted the net income of the organization and thus increments could also be seen in the net income of the organization Net Income which stood in the year ending 2008 at 12 7 billion increased to 13 4 billion for the year ending 2009 and again increased to 14 3 billion in the year ending 2010 Wal Mart Stores Inc Financial Statement 2010 Again if cash flow statement of the organization is analyzed it can easily be viewed that the cash flow from operating activities have always increased from the last three years The cash flow from operating activities stood at 20 6 billion in the year ending 2008 has increased to 23 1 billion for the year ending 2009 and too further increased to 26 2 billion for the year ending 2010 But the cash flow from investing and financing activities has seen positive and negative fluctuations both Here where net cash Wal Mart Inc 4 outflow from investing activities has decreased first and increased later again For the year ending 2008 it stood at 15 6 billion which decreased to 10 7 billion but again increased to 11 6 billion Again the net cash outflow from financing activities increased constantly since at the end of year 2008 it stood at 7 4 billion which further for the year ending 2009 increased to 9 9 billion and further increased to 14 1 billion for the year ending 2010 Wal Mart Stores Inc Financial Statement 2010 Wal Mart s return on equity has improved in the last three years which is a good sign for the shareholders of the company It was 19 9 in January 2008 which increased to 20 3 in 2009 and then again marginally increased to 20 4 in 2010 The return on asset has also shown the same trends in the last three years In 2008 the return on asset was 7 9 It increased to 8 1 in 2009 and then further increased to 8 4 in 2010 It shows the increase in the efficiency in the utilization of the assets of the company The net profit margins have been almost the same in the last three years in the company It was 3 4 in 2008 3 3 in 2009 and 3 5 in 2010 Wal Mart Stores Inc Financial Statement 2010 The price to sales ratio and price to book value ratio have shown negative trends in the last three years which shows that the stock of the company is available at cheap price as compare to the price it was carrying three years back The price to sales ratio which was 0 55 in 2008 was decreased to 0 46 in 2009 and then improved to 0 51 in 2010 Similarly price to book value ratio reduced from 3 12 in 2008 to 2 83 in 2009 and then improved marginally to 2 86 in 2010 This represents the better opportunity available for the shareholders to invest in to the stock of the company The book value per share of the company has also increased in the last three years It was 16 26 dollars Wal Mart Inc 5 per share in 2008 which increased to 16 63 dollars per share in 2009 and further improved to 18 69 dollars per share in 2010 This represents the increase in the retained earnings of the shareholders in the company Shim Siegel 2007 Wal Mart s current assets level has shown stability in the last three years for the company which shows the lesser investment in current assets for the company even with the increased sales In 2008 the cash and marketable securities available with the company was 48020 million dollars which increased to 48949 million dollars in 2009 and then decreased to 48331 million dollars in 2010 Quantitative Analysis holds huge significance while evaluating the financial health of the organization Three types of techniques are used for quantitative analysis The three techniques are trend analysis …
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