Analyze a company of your choice and provide specific focus on the 3 key financial statements. You could analyze the company's income statement, balance sheet and cash flow statement. Please submit a paper (Word document) that addresses some/all the following questions. I have attached a sample so that you know what I would expect.

What Company did you pick?

What is the trend in revenue for your company? -How satisfied are you with the company growth in lack of revenue growth? - Please provide data of the last 3 years of the company's revenue level. - Does your company make a profit? -Please provide data of the last 3 years of the company's net profit level.- What is the Return on Sales for your company, and comment on the level of profitability for your company.

 Provide data on the most current year's total assets, total liabilities, and stockholder's equity. -What percent of your company is owned by creditors? -In what shape is your company to paying its current bills?

Explain the differences between cash from operations, cash from investments and cash from financing. - Provide data on the current year's cash flow broken down by cash from operations, cash from investments and cash from financing and the total net cash flow. -Provide a statement on the overall financial health of the company you choose, and provide support for your answer.

 

What Company did you pick?

• Walmart Inc.

 

What is the trend in revenue for your company?

• The 2019 total revenues of Walmart is 2.81% higher than their 2018 total revenues. This is due to the increase in net sales.

 

How satisfied are you with the company growth in lack of revenue growth?

• The company is performing well. The annual sales that they are making are increasing but along with this, their expenses are also increasing. But there are a lots of good things that the company is making and one of those is that their day sales outstanding is 4 days only, meaning, they collect their receivables fast.

 

 Please provide data of the last 3 years of the company's revenue level.

• 2019 - 514,405
• 2018 - 500,343
• 2017 - 485,873 

 

Does your company make a profit?

• Walmart is making a profit. But the trend of profit that they are making is decreasing. As the sales increase, its corresponding costs also increase. The biggest increase in the expenses of Walmart which gave them a low trend of profit is the cost of sales followed by operating, selling, general and administrative expenses 

 

Please provide data of the last 3 years of the company's net profit level.

• 2019 - 7,179
• 2018 - 10,523
• 2017 - 14,293

 

What is the Return on Sales for your company, and comment on the level of profitability for your company.

• Return on Sales = 4.27%
• Return on Sales is a measure used to determine the amount of profit produced per dollar of the sales. The 4.27% return on sales is based on their 2019 data and the 2018 return on sales is 4.08%. it obviously increased which signals that the company is efficiently growing.

 

Provide data on the most current year's total assets, total liabilities, and stockholder's equity.

2019 data

ASSETS

Current assets:

Cash and cash equivalents..........................................................................................$ 7,722

Receivables, net....................................................................................................................6,283

Inventories............................................................................................................................44,269

Prepaid expenses and other..........................................................................................3,623

Total current assets..........................................................................................................61,897

Property and equipment:

Property and equipment...............................................................................................185,810

Less accumulated depreciation................................................................................(81,493)

Property and equipment, net......................................................................................104,317

Property under capital lease and financing obligations:

Property under capital lease and financing obligations.................................12,760

Less accumulated amortization.................................................................................(5,682)

Property under capital lease and financing obligations, net..........................7,078

Goodwill...................................................................................................................................31,181

Other long-term assets..................................................................................................14,822

Total assets...................................................................................................................$ 219,295

LIABILITIES AND EQUITY

Current liabilities:

Short-term borrowings.................................................................................................$ 5,225

Accounts payable.............................................................................................................47,060

Accrued liabilities...............................................................................................................22,159

Accrued income taxes..........................................................................................................428

Long-term debt due within one year...........................................................................1,876

Capital lease and financing obligations due within one year.............................729

Total current liabilities......................................................................................................77,477

Long-term debt..................................................................................................................43,520

Long-term capital lease and financing obligations.............................................6,683

Deferred income taxes and other................................................................................11,981

Commitments and contingencies Equity:

Common stock........................................................................................................................288

Capital in excess of par value......................................................................................2,965

Retained earnings...........................................................................................................80,785

Accumulated other comprehensive loss..............................................................(11,542)

Total Walmart shareholders' equity.........................................................................72,496

Noncontrolling interest......................................................................................................7,138

Total equity..........................................................................................................................79,634

Total liabilities and equity.......................................................................................$ 219,295

 

What percent of your company is owned by creditors?

• Debt Ratio = 63.79%. The company is financed more on liability rather than in equity.

 

In what shape is your company to paying its current bills?

• Current ratio = 80%. An ideal current ratio is 1:1. Walmart can pay 80% of current liabilities with their current assets.

 

Explain the differences between cash from operations, cash from investments and cash from financing.

• When the company pay their credit purchase of inventory, collect their receivables, pay their income tax payables and everything like the mentioned transactions then they are categorized in operating activities. Like what the name suggests, the cash paid or collected for this transactions are related to the normal operation of the company. Cash from investments are the expenditure for the purchase of property, plant and equipment and their investments in other companies. The investments usually requires a huge amount of cash. Last is the cash from financing where they generate cash from the sale of their shares or through having bonds payable including their fruits such as dividends and interest.

 

Provide data on the current year's cash flow broken down by cash from operations, cash from investments and cash from financing and the total net cash flow.

Cash flows from operating activities:

Consolidated net income........................................................................................................................................................$ 7,179

Adjustments to reconcile consolidated net income to net cash provided by operating activities:

Depreciation and amortization..............................................................................................................................................10,678

Unrealized (gains) and losses..................................................................................................................................................3,516

(Gains) and losses for disposal of business operations............................................................................................4,850

Deferred income taxes.................................................................................................................................................................(499)

Loss on extinguishment of debt...................................................................................................................................................—

Other operating activities............................................................................................................................................................1,734

Changes in certain assets and liabilities, net of effects of acquisitions:

Receivables, net...............................................................................................................................................................................(368)

Inventories..........................................................................................................................................................................................(1,311)

Accounts payable............................................................................................................................................................................1,831

Accrued liabilities................................................................................................................................................................................183

Accrued income taxes.....................................................................................................................................................................(40)

Net cash provided by operating activities........................................................................................................................27,753

Cash flows from investing activities:

Payments for property and equipment............................................................................................................................(10,344)

Proceeds from the disposal of property and equipment................................................................................................519

Proceeds from the disposal of certain operations............................................................................................................876

Purchase of available for sale securities ..................................................................................................................................—

Payments for business acquisitions, net of cash acquired.....................................................................................(14,656)

Other investing activities................................................................................................................................................................(431)

Net cash used in investing activities.................................................................................................................................(24,036)

Cash flows from financing activities:

Net change in short-term borrowings.......................................................................................................................................(53)

Proceeds from issuance of long-term debt......................................................................................................................15,872

Repayments of long-term debt..............................................................................................................................................(3,784)

Premiums paid to extinguish debt................................................................................................................................................—

Dividends paid.................................................................................................................................................................................(6,102)

Purchase of Company stock....................................................................................................................................................(7,410)

Dividends paid to noncontrolling interest.............................................................................................................................(431)

Purchase of noncontrolling interest............................................................................................................................................—

Other financing activities.............................................................................................................................................................(629)

Net cash used in financing activities..................................................................................................................................(2,537)

Effect of exchange rates on cash, cash equivalents and restricted cash..........................................................(438)

Net increase (decrease) in cash, cash equivalents and restricted cash................................................................742

Cash, cash equivalents and restricted cash at beginning of year...........................................................................7,014

Cash, cash equivalents and restricted cash at end of period..............................................................................$ 7,756

 

Provide a statement on the overall financial health of the company you choose, and provide support for your answer.

• Walmart has low quick ratio as well as current ratio. Since they have low quick ratio, they have to sell more inventories and convert them into cash to pay currently maturing obligations. The current assets of Walmart are not enough to pay its current liabilities. Days of inventory of the company is long because it takes 42 days to make sales from it. But the following points prove that Walmart has a healthy financial status. After the inventories are sold, they replace the inventory 8.75x. Aside from that, the collection system of Walmart is very impressive. They turn the receivables into cash in the span of 4 days. The suppliers are paid early. Lastly, the investors can receive 2.45 from the net income of each of their share.

Step-by-step explanation

Link: https://s2.q4cdn.com/056532643/files/doc_financials/2019/annual/Walmart-2019-AR-Final.pdf

 

• Return on Sales = Operating Profit / Net Revenue
• Return on Sales = 21,957 / 514,405 
• Return on Sales = 4.27% (2019 data)
• Return on Sales = 4.08% (2018 data)

 

Debt Ratio = Total Liabilities / Total Assets

Debt Ratio = 140,291 / 219,295

Debt Ratio = 63.79%

 

Current ratio = Current Assets / Current Liabilities

Current Ratio = 61,897/77,477

Current Ratio = 80%

 

 

 Quick ratio = (Current Assets - Inventories - Prepaids) / Current Liabilities

Quick Ratio =(61,897 - 44,269 - 3,623) / 77,477

Quick Ratio = 18.08%

 

Inventory turnover and Days inventory outstanding (DIO)

Inventory turnover = Cost of Goods Sold / Average Inventory - (2018 Inventory+ 2019 Inventory)/2

Inventory turnover = 385,301 / [(44,269+43,783 )/ 2]

Inventory turnover = 8.75

 

Days inventory outstanding = (Average Inventory / Cost of Goods Sold) x 365

Days inventory outstanding = {[(44,269+43,783 )/ 2] / 385,301} x 365

Days inventory outstanding = 42 days

 

Accounts Receivable Turnover and Days Sales Outstanding (DSO)

Accounts Receivable Turnover = Net Sales / Average Accounts Receivable

Accounts Receivable Turnover = 510,329 / [(6,283+5,614 )/2]

Accounts Receivable Turnover = 85.79

 

Days Sales Outstanding = (Average Accounts Receivable / Net Sales) x 365

Days Sales Outstanding = {[(6,283+5,614 )/2] / 510,329} x 365

Days Sales Outstanding = 4 days

 

Accounts Payable Turnover and Days Payable Outstanding (DPO)

Accounts Payable Turnover =Cost of Goods Sold / Average Accounts Payable

Accounts Payable Turnover = 385,301 / [(47,060+46,092)/2]

Accounts Payable Turnover = 8.27

 

Days Payable Outstanding = (Average Accounts Payable /Cost of Goods Sold ) x 365

Days Payable Outstanding = { [(47,060+46,092)/2] / 385,301} x 365

Days Payable Outstanding = 44 days

 

Net Profit Margin = (Total Sales - Cost of Goods Sold) / Total Sales

Net Profit Margin = (514,405 -385,301) / 514,405

Net Profit Margin = 25.10%

 

Earnings Per Share = (Net Income - Preference Dividends) / Weighted Average Outstanding Shares

Earnings Per Share = (7,179 - 0) / 2,929

Earnings Per Share = 2.45