Capital Structure Analysis - Walmart Essay

Words: 4067
Pages: 17


Every business decision is associated in one way or another with the financial condition of the organization. The results of a working capital analysis will assist in the determination of organization¡¦s ability to remain in a particular line of business. The primary focus of Team C¡¦s analysis of Wal-Mart, Inc is its current and future financial condition. The most imperative areas that are found in the Capital Structure Analysis Report fall into the following categories: Working Capital Management, Valuation and Investment, and Cost of Capital. The company¡¦s operational processes within each area can be examined and related financial data reviewed. Once the financial data is collected and calculated potential areas for
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The easiest way to attempt to correct the problem and accomplish the identified short term goal is to increase sales and/or decrease debt. While overall company sales increased, some stores reported decreased sales. Internationally, sales have been consistent for the last three years; however, the majority of those sales are generated in Canada, the UK, and Mexico. Some decrease in revenue may be the result of ¡§rapid development of new stores in the International Segment¡¨. An option for decreasing the amount of debt and increasing sales would include slowing the expansion process in less productive areas and concentrating on the more productive markets.
Sources and Uses of Short-term Financing
Sources and uses of short-term financing are critical elements of effective financial management. Financial managers normally seek to match maturities when financing assets. The financing methods have a direct impact upon the ratios targeted for improvement. Within the last three years Wal-Mart has financed operations internally and externally. Accounts payable increased an average of 12% and financing using commercial paper increased an average of 123%. The amount of common stock issued has decreased each of the last three years. Within the next fiscal year, the company plans significant expansions and plans to finance these efforts