Wal-Mart 2013 Sec 10-K Annual Reports Analysis Project

Wal-Mart Stores Inc.

Wal-Mart 2013 SEC 10-K Annual Reports Analysis Project

University of Maryland University College

Acc 310 4025

9/27/2014

Overview

The company I selected to study and prepare a financial analysis is Wal-Mart Store INC. Wal-Mart, (NYSE:WMT) is an American multinational retailer corporation. I chose Wal-Mart because it is the world’s largest retailer, and I like the story and philosophy of Sam Walton (Wal-Mart‘s founder),” the secret of successful retailing is to give your customers what they want. And really if you think about it from point of view of the customers, you want everything: a wide assortment of good quality merchandise; the lowest possible price; guaranteed satisfaction; pleasant shopping experience.” I read the autobiography of Sam Walton. The story of Sam Walton is pretty amazing. He opened the first Wal-Mart in 1962 in Rogers, Arkansas. Wal-Mart is today a global leader in retail, and a number one fortune 500 company in the world. Wal-Mart operates over 11,000 retail units in 27 countries, and employs over 2.2 million associates around the word -1.3 million in the U.S. alone.

Financial Analysis of Wal-Mart Stores Inc. (WMT)

The following is an analysis of the financial reports presented by Wal-Mart in their annual report on form 10-k, for fiscal year ended 31 January 2014. Among other things, the 10-k offers a detailed picture of Wal-Mart‘s business, the operating and financial result for the fiscal year. I followed this annual report as best as possible to complete the four required financial statement, Income statement, consolidated balance sheet, statement of stockholder’s equity, and statement of cash flow.

Income Statement Analysis:

Looking at the Horizontal analysis of the Income Statement for Wal-Mart we can see that they had increases across the board from 2013 to 2014. Net Sales increased by 1.63% from 2013 to 2014. Cost of Goods Sold also increased by 1.64% from 2013 to 2014. This isn’t necessarily a bad thing because they are just trying to keep up with the amount that is being demanded from their customers. This accounts for the increase in Cost of Goods Sold from 2013 to 2014.

Wal-Mart Stores Inc.

Horizontal Analysis of the Income statement

Reported 1/31/2014 1/31/2013 Increase/Decrease

Year 2013 Year 2012 During 2013

In Thousands In Thousands Thousands Percent

Net Sales 476,294,000 468,651,000 7,643,000 1.63%

COGS 358,069,000 352,297,000 5,772,000 1.64%

Gross Profit 118,225,000 116,354,000 1,871,000 1.61%

Operating Income 26,872,000 27,725,000 (85,300) (3.08%)

Net Income from Continuing Operations 16,551,000 17,704,000 (977,000) (5.51%)

Discontinued Operations 144,000 52,000 92,000 176.92%

Net Income 16,022,000 16,999,000 (977,000) (5.49%)

Dividends per common share in dollars 1.88 1.59 .29 18.2%

Looking at the Ratio Analysis of Wal-Mart we see that their Gross Margin ratio is 24.31%. This means that gross profit is 24.31% of net sales for 2014. The Return on Sales ratio is 3.4%. This ratio is used to see how efficient a Company is operating, since Wal-Mart has a below industry normal average percentage here, but since they have such a high volume of sales they are able to operate at this level. Wal-Mart’s Return on Equity ratio is 21.01%. This ratio shows how much profit a company generates with the money shareholders have invested. Wal-Mart’s percentage is pretty good for this ratio they are using the money they get from investors pretty well. The Inventory Turnover Ratio is 7.94 days. This means that on average their inventory stays for about 7.94 days. This is a pretty quick turnover ratio, so they are turning over products fairly quickly.

Wal-Mart Stores Inc.

Ratio Analysis of the Income statement

31-Jan-14

Gross Margin Ratio 24.3% Gross Profit

Net Sales

Return on Sales 3.4% Net Income

Net Sales

Return on Assets 7.83% Net Income

AVG total assets

Return on Owners Equity 21.01% (Net Income - Preferred Stock Dividend)

Average Common SE

Inventory Turnover 7.94% Cost of Goods Sold

Average Inventory

EPS 15.99% (Net Income - Preferred Stock Dividend)

Balance sheet Analysis:

Based on the vertical analysis, or trend, for the 2013 calendar