FINAL PROJECT WALMART EVALUATING ANNUAL REPORT.

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$30.00 FINAL PROJECT WALMART EVALUATING ANNUAL REPORT.

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Due on Oct. 11, 2008
Asked on Sep 30, 2008 at 9:13:54PM

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EVALUATING AN ANNUAL REPORT ON WALMART FINAL PROJECT. CLASS FIN 200

2. Final Project: Evaluating an Annual Report
Â• Resources: Appendix A
Â• Due Date: Day 7 [Individual forum]
Â• Review Appendix A for details to include in your analysis of your chosen companyÂ’s
financial health.
Â• Prepare a 1,750- to 2,100-word paper, formatted according to APA guidelines, that
includes performance ratios based on the company's last two annual reports and data
available on the company's Web site.
o Compute the eight ratios listed below for two consecutive years. Discuss their
significance for management and compare them to industry averages.
Â• Current Ratio
Â• Quick Ratio
Â• Inventory Turnover Ratio (Note: on the Dunn and Bradstreet Web site this ratio is
labeled Sales to Inventory)
FIN 200 Introduction to Finance: Harvesting the Money Tree
Course Syllabus Page 21
abeled Sales to Inventory)
FIN 200 Introduction to Finance: Harvesting the Money Tree
Course Syllabus Page 21
Â• Debt Ratio (Note: on the Dunn and Bradstreet Web site this ratio is labeled Total
Liabilities to Net Worth)
Â• Net Profit Margin Ratio (Note: on the Dunn and Bradstreet Web site this ratio is
labeled Return on Sales)
Â• ROI (Note: on the Dunn and Bradstreet Web site this ratio is labeled Return on
Assets)
Â• ROE (Note: on the Dunn and Bradstreet Web site this ratio is labeled Return on
Net)
Â• Price-to-Earnings Ratio (P/E) Ratio
o Analyze the company's working capital management. Explain why the companyÂ’s
operating and cash cycles are currently optimized. If you think they are not optimized,
explain why.
o Based on the companyÂ’s financial statements, list the long-term debt held by the
corporation, maturity dates and yield to maturity. List the types of stock issued by the
company, the stocksÂ’ current selling price, and the 52-week average selling price.
o Compute the weighted average cost of capital (WACC) for both years and discuss
your findings.
o Write a brief analysis that summarizes the data youÂ’ve gathered throughout the
weeks and evaluates how your company compares to industry averages.
o Write your recommendations on whether as an investor you should buy this
company's stock and why.

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Posted on Sep 30, 2008 at 9:26:45PM

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Posted on Sep 30, 2008 at 10:35:33PM

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Preview: ... tions under Capital Leases 3603 3513 Further classification of long term debts based on the years when those are due is as under: 2008 2007 (Amount in millions of $) Year when Notes due 2009 4688 4372 2010 4584 4614 2036 4487 4465 2011 3511 3292 2038 3000 --- 2014 2982 2970 2012 2481 2426 2031 1994 1983 2039 1987 1966 2019 1764 515 2018 1027 28 2016 765 769 2028 750 --- 2013 516 18 2024 250 250 2015 42 45 2017 24 37 2008 -- 3141 2027 -- 1000 Others 860 759 The source of this information is Annual Report of Wal- Mart for 2008 Issued Stock of Wal- Mart The details of issued shareholders stocks and total equity taken from the Annual Report 2008 of Wal- Mart are as under: Year 2008 2007 Amount in millions of $ Common Stock of $0.10 par value, 11000 shares Authorized, 3973and 4131 issued and outstanding, As at January 31, 2008 and January31, 2007 397 413 Capital in excess of par value 3028 2834 Retained earnings 57319 55818 Accumulated and Comprehensive earnings 3864 2508 Total Shareholders’ equity 64608 61573 WACC Weighted average cost of capital (WACC) reflects the expected average future cost of funds over the long rub; found by weighing the cost of each specific type of capital by its proportion in firm’s capital structure.’ (Lawrence J. Gitman) The formula to calculate Weighted Average Cost of Capital (WACC) or Ka is Ka = (Wi * Ki) + (Wp * Kp) + (Ws *Kr or n) Where Wi = Proportion of Long Term Debts in capital structure Wp = Proportion of Capital Stock in capital structure Ws = Proportion of Common stock equity in capital structure Ki = Cost of Long Term Debt Kp = Cost of preferred stock Kr = Ks = Cost of common stock equity As per Note 2 to Consolidated Financial Statements in Annual Return 2008 of Wal- Mart, the weighted average interest on long term debt is 4.9%. Therefore Ki = 4.9% Wal Mart has not issued preferred stock and hence Kp is not to be considered. Di Kr = Ks = --- + g, where Po Di ...

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Preview: ... ratio is decrease from 0.25 in year 2007 to 0.21 in year 2008, reflecting fall in liquidity of the company... ... ... ... During fiscal 2008, company issued $11.2 billion of long-term debt. The net company proceeds from the issuance of such long-term debt wer ...

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Posted on Jan 22, 2009 at 1:12:34PM

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Preview: ... e weighted average effective interest rate on long-term debt, after considering the effect of interest rate swaps, was 4.8% and 4.9% at January 31, 2008 and 2007... ... ... ... Common Stock Company issued common stock at the rate of $0.10 per share. From time to time, company had repurchased shares of under a $10.0 billion share repurch ...

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Posted on May 20, 2009 at 4:10:24PM

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Preview: ... dity. Wal-Mart is not as liquid as its competitors such as Costco or Family Dollar Stores Inc. I believe the reason why Wal-Mart is not too liquid is because they are heavily investing their profits for expansion and growth. Management claims in their financial report that holding their liquid reserves in other currencies have helped Wal-Mart hedge against inflationary pressures of the US dollar. The next ratio to look at is the inventory ratio which is defined as the cost of sales divided by average inventory. In the year of 2007, Wal-Mart’s inventory ratio was 7.68, and as of January 2008 it was 7.96. Wal-Mart has a lot of sales therefore it doesn’t have too much a problem of holding too much inventory. Its competitors have similar ratios though they don’t have as much sales as Wal-Mart. Wal-Mart’s ability to sell at lower prices for same quality, gives them the edge against its competition. As of the year 2007, Wal-Mart had a debt ratio of .58, and as of January 2008, it had a debt ratio of .59. The debt ratio is calculated by dividing the total debt by its total assets. Wal-Mart has a lot more assets than it does debt so Wal-Mart is not overleveraged. Wal-Mart far exceeds their competition in comparison of assets. The Wal-Mart is the 800 pound gorilla in this industry and looks to remain that way. The next ratio to look at is the net profit margin ratio, which basically measures the return of sales. Wal-Mart had a 4% net profit margin ratio in the year 2007, and had a net profit margin ratio of 3% as of January 2008. The industry average is similar so the comparisons between the competitors remained flat. The ROI or also known as return on assets compute the efficiency of an investment. Wal-Mart had an 8% in the year of 2007 and as well as of January 2008. Wal-Mart had one of the highest ROI’s in the industry; however the most important of the number is its consistency. Wal-Mart is the most consistent than its competitors when comparing ROI. The return on net worth or also known as the return on stockholder’s equity gives a clear picture of the performance of Wal-M ...

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