1. 2. 3. 4. 5. 6. Financial Statement Analysis for Walmart In the group project folder, you will find the excel spread sheet that contains comparative financial statements for Walmart and Target for the past six years. Apply horizontal (growth rate) analysis for Walmart over the last year's number for important items in the shaded area on the Income Statement and the Balance Sheet. For vertical analysis, construct the common-size income statement and common-size balance sheet for Walmart by expressing each item in the shaded area on the Income Statement and the Balance Sheet as a percentage of a relevant total within the same year. In the ratio analysis sheet, calculate financial ratios for Walmart (as target company) and Target (as peer) for the latest 5 years. The ratios are grouped into four categories: a. Profitability Ratios: Gross Margin, Profit Margin, ROA, ROE b. Liquidity and Efficiency Ratios: Current Ratio, Quick Ratio, A/R turnover, Inventory turnover, Total Assets Turnover c. Solvency Ratios: Debt to Equity Ratio, Times Interest Earned d. Market Oriented Ratios: Price-Earnings Ratio, Dividend Yield Based on the calculations from above, provide a summary of findings. a. Are there any trends discovered for Walmart from the horizontal analysis? What do these trends imply about the business operations. b. Identify the significant change from the vertical analysis for Walmart. What does the change imply on business operations and what are the economic reasons that lead to the change? c. From the ratio analysis for both Walmart and Target, interpret the trend of the ratio change as good and bad for Walmart and the implication on business operations. Based on the financial performance analysis, indicate if the company is worthwhile for a long-term investment. Walmart Inc. Consolidated Statements of Income Income Statements Original Y 2022 2022-01-31 Y 2021 2021-01-31 Y 2020 2020-01-31 Income Statement Horizontal Growth Rate Y 2019 2019-01-31 Y 2018 2018-01-31 Y 2017 2017-01-31 Y 2022 2022-01-31 Y 2021 2021-01-31 Revenues: Net sales Membership and other income Total revenues Costs and expenses: Cost of sales Operating, selling, general and administrative expenses Operating income Interest: Debt Finance, capital lease and financing obligations Interest income Interest, net Loss on extinguishment of debt Other (gains) and losses Income before income taxes Provision for income taxes Consolidated net income Consolidated net income attributable to noncontrolling interest Consolidated net income attributable to Walmart Net income per common share: $567,762,000,000 $555,233,000,000 $519,926,000,000 $510,329,000,000 $495,761,000,000 $481,317,000,000 $4,992,000,000 $3,918,000,000 $4,038,000,000 $4,076,000,000 $4,582,000,000 $4,556,000,000 $572,754,000,000 $559,151,000,000 $523,964,000,000 $514,405,000,000 $500,343,000,000 $485,873,000,000 $429,000,000,000 $420,315,000,000 $394,605,000,000 $385,301,000,000 $373,396,000,000 $361,256,000,000 $117,812,000,000 $116,288,000,000 $108,791,000,000 $107,147,000,000 $106,510,000,000 $101,853,000,000 $25,942,000,000 $22,548,000,000 $20,568,000,000 $21,957,000,000 $20,437,000,000 $1,674,000,000 $1,976,000,000 $2,262,000,000 $1,975,000,000 $1,978,000,000 $320,000,000 $339,000,000 $337,000,000 $371,000,000 $352,000,000 ($158,000,000) ($121,000,000) ($189,000,000) ($217,000,000) ($152,000,000) $1,836,000,000 $2,194,000,000 $2,410,000,000 $2,129,000,000 $2,178,000,000 $2,410,000,000 $3,136,000,000 $3,000,000,000 ($210,000,000) ($1,958,000,000) $8,368,000,000 $18,696,000,000 $20,564,000,000 $20,116,000,000 $11,460,000,000 $15,123,000,000 $4,756,000,000 $6,858,000,000 $4,915,000,000 $4,281,000,000 $4,600,000,000 $13,940,000,000 $13,706,000,000 $15,201,000,000 $7,179,000,000 $10,523,000,000 ($267,000,000) ($196,000,000) ($320,000,000) ($509,000,000) ($661,000,000) $13,673,000,000 $13,510,000,000 $14,881,000,000 $6,670,000,000 $9,862,000,000 $22,764,000,000 $2,044,000,000 $323,000,000 ($100,000,000) $2,267,000,000 $20,497,000,000 $6,204,000,000 $14,293,000,000 ($650,000,000) $13,643,000,000 Basic net income per common share attributable to Walmart (in USD per share) Diluted net income per common share attributable to Walmart (in USD per share) Weighted-average common shares outstanding: $4.90 $4.77 $5.22 $2.28 $3.29 $4.87 $4.75 $5.19 $2.26 $3.28 $4.40 $4.38 Basic (in shares) 2,792,000,000 Diluted (in shares) Dividends declared per common share (in USD per share) 2,805,000,000 $2.20 2,831,000,000 2,847,000,000 $2.16 2,850,000,000 2,868,000,000 $2.12 2,929,000,000 2,945,000,000 $2.08 2,995,000,000 3,010,000,000 $2.04 3,101,000,000 3,112,000,000 $2.00 Y 2020 2020-01-31 Y 2019 2019-01-31 Income Statement Common Size Analysis Y 2018 2018-01-31 Y 2022 2022-01-31 Y 2021 2021-01-31 Y 2020 2020-01-31 Y 2019 2019-01-31 Y 2018 2018-01-31 Walmart Inc. Consolidated Balance Sheets Y 2022 2022-01-31 Y 2021 2021-01-31 Balance Sheet - Original Y 2020 2020-01-31 Balance Sheet - Horizontal Growth Rate Y 2019 2019-01-31 Y 2018 Y 2017 Y 2022 Y 2021 2018-01-31 2017-01-31 2022-01-31 2021-01-31 ASSETS Current assets: Cash and cash equivalents Receivables, net Inventories Prepaid expenses and other Total current assets Property and equipment Less accumulated depreciation $14,760,000,000 $8,280,000,000 $56,511,000,000 $1,519,000,000 $81,070,000,000 Property and equipment, net $94,515,000,000 Property under capital lease and financing obligations Less accumulated amortization Operating lease right-of-use assets Finance lease right-of-use assets, net $13,758,000,000 $4,351,000,000 Property under capital lease and financing obligations, net Other long-term assets $29,014,000,000 $22,152,000,000 $244,860,000,000 Goodwill Total assets Total assets LABILITIES LIABILITIES AND EQUITY Current liabilities: Short-term borrowings Accounts payable Accrued liabilities Accrued income taxes Long-term debt due within one year Operating lease obligations due within one year Finance lease obligations due within one year Capital lease and financing obligations due within one year Total current liabilities Long-term debt Long-term Long-term operating lease obligations $410,000,000 $55,261,000,000 $26,060,000,000 $851,000,000 $2,803,000,000 $1,483,000,000 $17,741,000,000 $9,465,000,000 $7,722,000,000 $6,756,000,000 $6,867,000,000 $6,516,000,000 $6,284,000,000 $6,283,000,000 $5,614,000,000 $5,835,000,000 $44,949,000,000 $44,435,000,000 $44,269,000,000 $43,783,000,000 $43,046,000,000 $20,861,000,000 $1,622,000,000 $3,623,000,000 $3,511,000,000 $1,941,000,000 $90,067,000,000 $61,806,000,000 $61,897,000,000 $59,664,000,000 $57,689,000,000 $185,154,000,000 $179,492,000,000 ($77,479,000,000) ($71,782,000,000) $92,201,000,000 $105,208,000,000 $104,317,000,000 $107,675,000,000 $107,710,000,000 $12,703,000,000 $11,637,000,000 ($5,560,000,000) ($5,169,000,000) $13,642,000,000 $17,424,000,000 $4,005,000,000 $4,417,000,000 $7,078,000,000 $7,143,000,000 $6,468,000,000 $28,983,000,000 $31,073,000,000 $31,181,000,000 $18,242,000,000 $17,037,000,000 $23,598,000,000 $16,567,000,000 $14,822,000,000 $11,798,000,000 $9,921,000,000 $252,496,000,000 $236,495,000,000 $219,295,000,000 $204,522,000,000 $198,825,000,000 $224,000,000 $49,141,000,000 $37,966,000,000 $242,000,000 $3,115,000,000 $1,466,000,000 $280,000,000 $5,362,000,000 $1,793,000,000 $428,000,000 $1,876,000,000 $575,000,000 $5,225,000,000 $46,973,000,000 $47,060,000,000 $22,296,000,000 $22,159,000,000 $5,257,000,000 $1,099,000,000 $46,092,000,000 $41,433,000,000 $22,122,000,000 $645,000,000 $3,738,000,000 $20,654,000,000 $921,000,000 $2,256,000,000 $511.000.000 $491,000,000 $511,000,000 $729,000,000 $87,379,000,000 $92,645,000,000 $77,790,000,000 $77,477,000,000 Long-term finance lease obligations $34,864,000,000 $13,009,000,000 $4,243,000,000 $41,194,000,000 $12,909,000,000 $3,847,000,000 $43,714,000,000 $43,520,000,000 $16,171,000,000 $667,000,000 $78,521,000,000 $66,928,000,000 $30,045,000,000 $36,015,000,000 $565,000,000 $4,307,000,000 Long-term capital lease and financing obligations Deferred income taxes and other $13,474,000,000 Equity. Equity: Common stock Capital in excess of par value $276,000,000 $4,839,000,000 $282,000,000 $3,646,000,000 Retained earnings $86.904.000.000 Accumulated other comprehensive loss ($8,766,000,000) Noncontrolling interest Total Walmart shareholders' equity Total equity Total liabilities and equity $83,253,000,000 $8,638,000,000 $91,891,000,000 $244,860,000,000 $6,683,000,000 $6,780,000,000 $6,003,000,000 $14,370,000,000 $12,961,000,000 $11,981,000,000 $8,354,000,000 $9,344,000,000 $284,000,000 $288,000,000 $295,000,000 $305,000,000 $3,247,000,000 $2,965,000,000 $2,648,000,000 $2,371,000,000 $88.763.000.000 $83,943,000,000 $80,785,000,000 $85,107,000,000 $89.354.000.000 ($11,766,000,000) ($12,805,000,000) ($11,542,000,000) ($10,181,000,000) ($14,232,000,000) $80,925,000,000 $74,669,000,000 $72.496.000.000 $77,869,000,000 $77,798,000,000 $6,883,000,000 $7,138,000,000 $2,953,000,000 $2,737,000,000 $81,552,000,000 $79,634,000,000 $80,822,000,000 $80,535,000,000 $236,495,000,000 $219,295,000,000 $204,522,000,000 $198,825,000,000 $6,606,000,000 $87,531,000,000 $252,496,000,000 Y 2020 2020-01-31 Balance Sheet - Common Size Analysis Y 2020 2020-01-31 Y 2019 2019-01-31 Y 2018 2018-01-31 Y 2019 2019-01-31 Y 2018 Y 2022 Y 2021 2018-01-31 2022-01-31 2021-01-31 Gross Margin Profit Margin ROA ROE Walmart Profitability Ratios Y 2022 Y 2021 Y 2020 Y 2019 Y 2018 Liquidity and Efficiency Ratios Y 2022 Current Ratio Quick Ratio A/R Turnover Inventory Turnover Total Asset Turnover Y 2021 Profitability Ratios Y 2022 Y 2021 Debt to Equity Ratio Times Interest Earned Price-Earnings Ratio Dividends Yield Price at Fiscal Year End Profitability Ratios Y 2022 Y 2021 Gross Margin Profit Margin ROA ROE Target Profitability Ratios Y 2022 Y 2021 Y 2020 Y 2019 Y 2018 Liquidity and Efficiency Ratios Y 2020 Y 2019 Y 2018 Y 2022 Current Ratio Y 2020 Y 2019 Y 2018 Y 2020 Y 2019 Y 2018 Quick Ratio A/R Turnover Inventory Turnover Total Asset Turnover Debt to Equity Ratio Times Interest Earned Price-Earnings Ratio Dividends Yield Price at Fiscal Year End Y 2021 Y 2020 Y 2019 Y 2018 Profitability Ratios Y 2022 Y 2021 Y 2020 Y 2019 Y 2018 Y 2022 Profitability Ratios Y 2021 Y 2020 Y 2019 Y 2018 Assets Target Corp Consolidated Balance Sheets Y 2022 2022-01-29 Y 2021 2021-01-30 Y 2020 2020-02-01 Y 2019 2019-02-02 Y 2018 2018-02-03 Y 2017 2017-01-28 Cash and cash equivalents Inventory Other current assets Total current assets Property and equipment Land Buildings and improvements Fixtures and equipment Computer hardware and software Construction-in-progress Accumulated depreciation Property and equipment, net Operating lease assets Other noncurrent assets Total assets $5,911,000,000 $8,511,000,000 $2,577,000,000 $1,556,000,000 $2,643,000,000 $2,512,000,000 $13,902,000,000 $10,653,000,000 $8,992,000,000 $9,497,000,000 $8,597,000,000 $8,309,000,000 $1,760,000,000 $1,592,000,000 $1,333,000,000 $1,466,000,000 $1,300,000,000 $1,169,000,000 $21,573,000,000 $20,756,000,000 $12,902,000,000 $12,519,000,000 $12,540,000,000 $11,990,000,000 $6,164,000,000 $6,141,000,000 $6,036,000,000 $6,064,000,000 $6,095,000,000 $6,106,000,000 $32,985,000,000 $31,557,000,000 $30,603,000,000 $29,240,000,000 $28,131,000,000 $27,611,000,000 $6,407,000,000 $5,914,000,000 $6,083,000,000 $5,912,000,000 $5,623,000,000 $5,503,000,000 $2,505,000,000 $2,765,000,000 $2,692,000,000 $2,544,000,000 $2,645,000,000 $2,651,000,000 $1,257,000,000 $780,000,000 $533,000,000 $460,000,000 $440,000,000 $200,000,000 ($21,137,000,000) ($20,278,000,000) ($19,664,000,000) ($18,687,000,000) ($18,398,000,000) ($17,413,000,000) $28,181,000,000 $26,879,000,000 $26,283,000,000 $25,533,000,000 $24,536,000,000 $24,658,000,000 $2,556,000,000 $2,227,000,000 $2,236,000,000 $1,965,000,000 $1,884,000,000 $1,501,000,000 $1,386,000,000 $1,358,000,000 $1,273,000,000 $1,343,000,000 $783,000,000 $53,811,000,000 $51,248,000,000 $42,779,000,000 $41,290,000,000 $40,303,000,000 $37,431,000,000 Liabilities and shareholders' investment Accounts payable Accrued and other current liabilities $15,478,000,000 $12,859,000,000 $9,920,000,000 $9,761,000,000 $8,677,000,000 $7,252,000,000 $6,098,000,000 $6,122,000,000 $4,406,000,000 $4,201,000,000 $4,094,000,000 $3,737,000,000 Current portion of long-term debt and other borrowings $171,000,000 $1,144,000,000 $161,000,000 $1,052,000,000 $281,000,000 $1,718,000,000 Total current liabilities Long-term debt and other borrowings Noncurrent operating lease liabilities Deferred income taxes Other noncurrent liabilities Total noncurrent liabilities Shareholders' investment Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total shareholders' investment Total liabilities and shareholders' investment $21,747,000,000 $20,125,000,000 $14,487,000,000 $15,014,000,000 $13,052,000,000 $12,707,000,000 $13,549,000,000 $11,536,000,000 $11,338,000,000 $10,223,000,000 $11,117,000,000 $11,031,000,000 $2,493,000,000 $2,218,000,000 $2,275,000,000 $2,004,000,000 $1,924,000,000 $1,566,000,000 $990,000,000 $1,122,000,000 $972,000,000 $693,000,000 $861,000,000 $1,629,000,000 $1,939,000,000 $1,724,000,000 $1,780,000,000 $1,866,000,000 $1,879,000,000 $19,237,000,000 $16,683,000,000 $16,459,000,000 $14,979,000,000 $15,600,000,000 $13,771,000,000 $39,000,000 $42,000,000 $42,000,000 $43,000,000 $45,000,000 $46,000,000 $6,421,000,000 $6,329,000,000 $6,226,000,000 $6,042,000,000 $5,858,000,000 $5,661,000,000 $6,920,000,000 $8,825,000,000 $6,433,000,000 $6,017,000,000 $6,495,000,000 $5,884,000,000 ($553,000,000) ($756,000,000) ($868,000,000) ($805,000,000) ($747,000,000) ($638,000,000) $12,827,000,000 $14,440,000,000 $11,833,000,000 $11,297,000,000 $11,651,000,000 $10,915,000,000 $53,811,000,000 $51,248,000,000 $42,779,000,000 $41,290,000,000 $40,303,000,000 $37,431,000,000 Y 2021 2022-01-29 Y 2020 2021-01-30 Y 2019 2020-02-01 Y 2018 2019-02-02 Operating activities Net earnings $6,946,000,000 $4,368,000,000 $3,281,000,000 $2,937,000,000 Y 2017 2018-02-03 $2,914,000,000 Earnings from discontinued operations, net of tax Net earnings from continuing operations $6,946,000,000 $4,368,000,000 $12,000,000 $3,269,000,000 $7,000,000 $6,000,000 $2,930,000,000 $2,908,000,000 Adjustments to reconcile net earnings to cash provided by operations: Depreciation and amortization $2,642,000,000 $2,485,000,000 $2,604,000,000 $2,474,000,000 $2,476,000,000 Share-based compensation expense $228,000,000 Deferred income taxes $522,000,000 $200,000,000 ($184,000,000) $147,000,000 $132,000,000 $112,000,000 $178,000,000 $322,000,000 ($188,000,000) Gain on Dermstore sale ($335,000,000) Loss on debt extinguishment Noncash losses /(gains) and other, net Changes in operating accounts: Inventory Other assets Accounts payable Accrued and other liabilities $512,000,000 $10,000,000 $123,000,000 $67,000,000 $86,000,000 $29,000,000 $95,000,000 $208,000,000 ($3,249,000,000) ($1,661,000,000) $505,000,000 ($900,000,000) ($348,000,000) ($78,000,000) ($137,000,000) $18,000,000 ($299,000,000) ($156,000,000) $2,628,000,000 $2,925,000,000 $140,000,000 $1,127,000,000 $1,307,000,000 ($746,000,000) $1,931,000,000 $199,000,000 $89,000,000 $419,000,000 Cash provided by operating activities-continuing operatio $8,625,000,000 $10,525,000,000 $7,099,000,000 Cash provided by operating activities-discontinued operations Cash provided by operating activities $8,625,000,000 $10,525,000,000 $18,000,000 $7,117,000,000 $5,970,000,000 $3,000,000 $5,973,000,000 $6,861,000,000 $74,000,000 $6,935,000,000 Investing activities Expenditures for property and equipment Proceeds from disposal of property and equipment ($3,544,000,000) $27,000,000 ($2,649,000,000) ($3,027,000,000) ($3,516,000,000) ($2,533,000,000) $42,000,000 $63,000,000 $85,000,000 $31,000,000 Cash paid for acquisitions, net of cash assumed Proceeds from Dermstore sale Other investments Cash required for investing activities Financing activities Additions to long-term debt Reductions of long-term debt Dividends paid ($518,000,000) $356,000,000 $7,000,000 ($3,154,000,000) $16,000,000 ($2,591,000,000) $20,000,000 ($2,944,000,000) $15,000,000 ($3,416,000,000) ($55,000,000) ($3,075,000,000) $1,972,000,000 ($1,147,000,000) $2,480,000,000 ($2,415,000,000) $1,739,000,000 $739,000,000 ($2,069,000,000) ($281,000,000) ($2,192,000,000) ($1,548,000,000) ($1,343,000,000) ($1,330,000,000) Repurchase of stock ($7,356,000,000) ($745,000,000) ($1,565,000,000) ($1,335,000,000) ($2,124,000,000) ($1,338,000,000) ($1,046,000,000) Stock option exercises $8,000,000 Cash required for financing activities ($8,071,000,000) $23,000,000 ($2,000,000,000) Net (decrease) / increase in cash and cash equivalents ($2,600,000,000) $5,934,000,000 $73,000,000 ($3,152,000,000) $1,021,000,000 $96,000,000 ($3,644,000,000) ($1,087,000,000) $108,000,000 ($3,729,000,000) $131,000,000 Cash and cash equivalents at beginning of period $8,511,000,000 $2,577,000,000 $1,556,000,000 $2,643,000,000 $2,512,000,000 Cash and cash equivalents at end of period $5,911,000,000 $8,511,000,000 $2,577,000,000 $1,556,000,000 $2,643,000,000 Supplemental information Interest paid, net of capitalized interest $414,000,000 $939,000,000 $492,000,000 $476,000,000 $678,000,000 Income taxes paid $2,063,000,000 $1,031,000,000 $696,000,000 $373,000,000 $934,000,000 Leased assets obtained in exchange for new finance lease I $288,000,000 $428,000,000 $379,000,000 $130,000,000 $139,000,000 Leased assets obtained in exchange for new operating leas $580,000,000 $262,000,000 $464,000,000 $246,000,000 $212,000,000