Week Five Assignment 1 Essay

Submitted By Betty-Brooks
Words: 1138
Pages: 5

Public Company By: Betty Brooks ACC205: Principles of Accounting Professor: Brent Tabor Date: November 24, 2014

For this financial statement analysis I have decided to discuss the financial statement on Walmart, I will include the company overview, I will answer the following questions; What industry is in it? What are the main products or services? And who are its competitors? I will also include an horizontal Analysis of Income Statement and Balance sheet, I will show a 3 year analysis of the income and balance sheet, I will discuss the importance and meaning of an Horizontal Analysis as well as positive and negative trends. I will then calculate the current ratio, the quick ratio, and the cash to current liabilities ratio. Also I will discuss liquidity issues of both my company and competitor company issues and factors that could influence the results of the ratios. Then after all that I will or will not recommend an investment, name the strengths,and name the risks. Walmart is a multinational retail corporation that operates many chains of large discount department stores and warehouses including Sams stores all over the United States. The headquarters for Walmart is located in Bentonville ,Ark. The main products Walmart has to offer to the customers is price perception, this means that Walmart is known as the place to go when you need just about anything and want to pay the lowest price. Sometimes Walmart may not have certain items that cost lower than its competitors, so Walmart began to price match in order to be sure the customer is getting the best price for that item. The main services that Walmart has to offer is retail goods such as food, cleaning supplies, household supplies, health and beauty needs, baby/ child items. And many more. Walmart also has photo services where people go to develop photos, Pharmacy where people get their prescriptions, financial services where people send money orders, pay bills, cash checks and so forth. Wireless services where people buy phones and other electronic items, phone connections and accessories. Auto services is another that Walmart provides where people get oil changes, tire replacement, and anything else needed for a vehicle, there are also many more services that Walmart provides as well. Walmart has many competitors such as Target, Costco, Kmart, Dollar General, Family Dollar, and many other retail department stores as well. Horizontal analysis is (according to the text) “used to compare data from two or more periods,side-by-side” (Wainwright, s. 2012). The importance of horizontal analysis is when looking into a company's income it shows changes in two or more accounting periods. It also helps when investors are trying to decide whether or no they would like to invest money into that company, the investors could look at the financial records of more than one year to find the increase or decline in the company's trends. After looking at the trends the positives about Walmart is that it constantly brings in more money each year, in some cases the liabilities is in the negative, the depreciation is always in the negative and most of the liabilities and equity is low. The negatives are the total assets and total liabilities and equity is the same amount, therefore the company makes no extra money. Walmart Stores Inc. Annual Income Statement
Currency in U.S Dollars
01/31/11
01/31/12
01/31/13
Revenues
$421,849.00
$446,509.00
$468,651.00
Total Revenue
$421,849.00
$446,509.00
$468,651.00
Cost of Goods Sold
$314,946.00
$334,993.00
$352,297.00
Gross Profit
$106,903.00
$111,516.00
$116,354.00
Selling and Admin Expenses
$81,361.00
$85,025.00
$88,629.00
Operating Expenses
$81,361.00
$85,025.00
$88,629.00
Operating Income
$25,542.00
$26,491.00
$27,725.00
Interest Expense
-$2,205.00
-$2,320.00
-$2,249.00
Interest/investment Income
$201.00
$161.00
$186.00
Net Interest Expense…