Part 1 ? Vertical and Horizontal Analysis

Vertical Analysis

Vertical analysis is a method in which the relationship between items in the same financial statement is identified by converting all amounts into percentages of the total. This method is also known as the common size as it allows to compare companies of different sizes in the same industry.

This type of analysis has two main advantages; the first is that the percentages can be compared over a number of periods allowing to identify unusual changes in the accounts over time. The unusual changes can be further analyzed and action is taken to bring percentages back to normal levels. The second advantage is that financials from companies of different sizes within the same industry can be compared. This type of comparison allows seeing where companies stand versus a particular competitor or the industry. In the case of Wal-Mart the comparison is performed to industry benchmark.

The vertical analysis on the income statement is performed by comparing each expense to the net sales and the balance sheet is performed by comparing each asset to the total assets and the liabilities, long term debt and equities are shown as a percentage of the total liabilities and stockholder equity.

Income Statement

The vertical analysis of Wal-Mart?s income statement was performed by dividing each expense over the net sales. This allows to see how each dollar of sales is distrusted among the various costs, expenses and profits. It also allows to see the trends of successive years for these items. For example, -----------------------------------------------------???. The consolidated net income ------from 2012 to 2013 but then ?in 2014 and ?.in 2015. So provide the analysis now

Balance Sheet

The vertical analysis of Wal-Mart?s balance sheet is performed by diving assets as a percentage of total assets and current liabilities, long term debt and equities as a percentage of total liabilities and shareholder?s equity. The balance sheet provides internal and external customer and owner?s essential information about the company?s financial position at a specific moment as it reveals the assets the same thing with balance sheet????..

[VD1]

Horizontal Analysis:

Horizontal analysis is a method that shows change in the amounts of financial statement items over a period of time. It is useful to evaluate trends within the company also known as the trend analysis. A base period needs to be establish which is the earliest period being analyzed. The items on the statements after the base period are compared to such. The horizontal analysis main purpose is to see how values change over time and not being utilized or distributed. The base period for the income statement and balance sheet will be 2012 for the purpose of this analysis.

Income Statement

The horizontal analysis for Wal-Mart?s income statement does not show a ? trend. SAME THING HERE

Balance Sheet

The horizontal analysis for Wal-Mart?s balance sheet shows a ?. trend. SAME THING HERE?.

Part 2 ? Ratio Analysis

Liquidity Ratios

Calculations:

Current Ratio: total assets / total current liabilities

Working Capital: Total assets ? total current liabilities

Acid-test ratio: (cash + accounts receivables) / total current liabilities

Inventory turnover: cost of sales / average inventory

Days sales in inventory: 365 / inventory turnover

Accounts receivables turnover: total net sales / average accounts receivables

Days sales in receivables: 365 / A/R turnover

Free cash flow: Operating cash flow + capital expenditures

Average Inventory: (inventory 2015 + inventory 2014)/2

Average A/R: (accounts receivables 2015 + accounts receivables 2014)/2

Liquidity Ratios

Fiscal Year Ended

2/1/2015

2/2/2014

2/3/2013

1/29/2012

Current ratio

Working capital

Acid-test ratio

Inventory turnover (times)

Days sales in inventory

Accounts receivable turnover (times)

Days sales in receivables

Free cash flow

Average inventory

Average A/R

Analysis:

Liquidity ratios determine the company?s ability to pay off its short-term debt. The ability to turn short-term assets into cash to cover debt is very important for investor?s fundamental analysis. Wal-Mart?s current ratio has been ? much l?..than the current ratio as a core part of their business is being eliminated from the calculation.

Overall the liquidity rations have been ????..?

Long-Term Solvency

Calculations:

Debt to equity: long-term liabilities / total equity

Interest coverage: operating income / interest expense

Long-term liabilities: total liabilities - total current liabilities

Solvency Ratios

Fiscal Year Ended

2/1/2015

2/2/2014

2/3/2013

1/29/2012

Debt to equity

Interest coverage

Long term liabilities

Analysis:

The debt to equity ratio has ?

Profitability Performance

Calculations:

Asset turnover: total net revenues / average total assets

Return on sales: adjusted net income / total net revenues

Gross margin %: (total revenue ? cost of sales) / total revenue

Return on assets: adjusted net income / average total assets

Return on equity: net earnings / average equity

Average interest rate: interest expense / average total liabilities

Average total assets: (total assets 2015 + total assets 2014)/2

Income tax rate: Provision for income taxes / earnings before income taxes

Net of tax interest expense: income tax rate * interest expense

Adjusted net income: net earning + net of tax interest expense

Average equity: (total shareholders? equity 2015 + total shareholders? equity 2014)/2

Average total liabilities: (total liabilities 2015 + total liabilities 2014)/2

Profitability Ratios

Fiscal Year Ended

2/1/2015

2/2/2014

2/3/2013

1/29/2012

Asset turnover

Return on sales

Gross margin %

Return on assets

Return on equity

Average interest rate

Average total assets

Income tax rate

Net of tax interest expense

Adjusted net income

Average equity

Average total liabilities

Analysis:

Profitability ratios are important for the analysis of a company as well. They determined the company?s bottom line and its return to its investors.

The asset turnover ratio indicated that Wal-Mart is using its assets ?

DuPont Model ? Analysis of ROA

Calculations:

Product: Return on sales* asset turnover

DuPont Analysis of ROA

Fiscal Year Ended

2/1/2015

2/2/2014

2/3/2013

Return on assets (calculated)

Return on sales

Asset turnover

Product

Analysis:

ROA has ?.

Stock Performance

Calculations:

Book value per common share: book value of equity / common shares outstanding

P/E Ratio: adjusted closing price / earnings per share (diluted)

Dividend yield: dividend per share / adjusted closing price

Dividend payout: dividend per share / earnings per share (diluted)

Adjusted basic EPS: adjusted net income / Weighted average shares outstanding: basic

Adjusted diluted EPS: adjusted net income / Weighted average shares outstanding: diluted

Adjusted P/E ratio: adjusted closing price / adjusted diluted EPS

Adjusted dividend payout: Dividends per share / adjusted diluted EPS

Stock Ratios

Fiscal Year Ended

2/1/2015

2/2/2014

2/3/2013

1/29/2012

Book value per common share

Earnings per share (basic)

Earnings per share (diluted)

P/E Ratio

Dividend yield

Dividend payout

Adjusted Basic EPS

Adjusted Diluted EPS

Adjusted P/E Ratio

Adjusted dividend payout

Book value of equity

Common shares outstanding

Adjusted closing price

Dividends per share

Analysis:

Wal-Mart is a growing company. The book value has ???CONTINUE THE ANALYSIS

APPENDIX A

Wal-Mart?s Common Size Income Statement

WAL MART STORES INC

10-K

Income Statement

(Amounts in millions except per share data)

Fiscal Year Ended January 31,

2015

2014

2013

2012

2015

2014

2013

2012

Revenues:

%

%

%

%

Net sales

482,229

473,076

465,604

443,416

100.00%

100.00%

100.00%

100.00%

Membership and other income

Costs and expenses:

Cost of sales

Operating, selling, general and administrative expenses

Gross Margin

Operating income

Interest:

Debt

Capital leases

Interest expense

Interest income

Interest, net

Income from continuing operations before income taxes

Provision for income taxes:

Current

Deferred

Total provision for income taxes

Income from continuing operations

Income (Loss) from discontinued operations, net of tax

Consolidated net income

Consolidated net income attributable to noncontrolling interest

Consolidated net income attributable to Walmart

APPENDIX B

Discount Department Stores Industry Benchmark Common Size Income Statement (Data Period 2013)

Company Size

All

Large

Medium

Small

Size by Revenue

Over $50M

$5M - $50M

Under $5M

Company Count

Net Sales

100%

100%

100%

100%

Gross Margin

Officer Compensation

Advertising & Sales

Other Operating Expenses

Operating Expenses

Operating Income

Net Income

APPENDIX C

Wal-Mart?s Common Size Balance Sheet

WAL MART STORES INC

10-K

Balance Sheet

(Amounts in millions except per share data)

Fiscal Year Ended January 31,

2015

2014

2013

2012

2015

2014

2013

2012

ASSETS

%

%

%

%

Current assets:

Cash and cash equivalents

Receivables

Inventories

Prepaid expenses and other

Current assets of discontinued operations

Total current assets

Property and equipment, at cost

Less accumulated depreciation

Property and equipment, net

Property under capital lease

Less accumulated amortization

Property under capital lease, net

Goodwill

Other assets and deferred charges

Total assets

203,706

204,751

203,105

193,406

100.00%

100.00%

100.00%

100.00%

LIABILITIES AND SHAREHOLDERS EQUITY

Current liabilities:

Short-term borrowings

Accounts payable

Accrued liabilities

Accrued income taxes

Long-term debt due within one year

Obligations under capital leases due within one year

Current liabilities of discontinued operations

Total current liabilities

Long-term debt

Long-term obligations under capital leases

Deferred income taxes and other

Redeemable non-controlling interest

Commitments and contingencies

Total liabilities

Shareholders? equity:

Common stock

Capital in excess of par value

Retained earnings

Accumulated other comprehensive income (loss)

Total Walmart shareholders' equity

Noncontrolling interest

Total equity

Total liabilities and shareholders? equity

203,706

204,751

203,105

193,406

100.00%

100.00%

100.00%

100.00%

APPENDIX D

Discount Department Stores Industry Benchmark Common Size Balance Sheet (Data Period 2013)

Company Size

All

Large

Medium

Small

Size by Revenue

Over $50M

$5M - $50M

Under $5M

Balance Sheet

Cash

Accounts Receivable

Inventory

Total Current Assets

Property, Plant & Equipment

Other Non-Current Assets

Total Assets

Accounts Payable

Total Current Liabilities

Total Long Term Liabilities

Net Worth

APPENDIX E

Wal-Mart?s Trend Analysis Income Statement

WAL MART STORES INC

10-K

Income Statement

(Amounts in millions except per share data)

Base Year

Fiscal Year Ended January 31,

2015

%

2014

%

2013

%

2012

Revenues:

Net sales

Membership and other income

Costs and expenses:

Cost of sales

Operating, selling, general and administrative expenses

Operating income

Interest:

Debt

Capital leases

Interest expense

Interest income

Interest, net

Income from continuing operations before income taxes

Provision for income taxes:

Current

Deferred

Total provision for income taxes

Income from continuing operations

Income (Loss) from discontinued operations, net of tax

Consolidated net income

Consolidated net income attributable to noncontrolling interest

Consolidated net income attributable to Walmart

APPENDIX F

Wal-Mart?s Trend Analysis Balance Sheet

WAL MART STORES INC

10-K

Balance Sheet

(Amounts in millions except per share data)

Base Year

Fiscal Year Ended January 31,

2015

2014

2013

2012

ASSETS

Current assets:

Cash and cash equivalents

Receivables

Inventories

Prepaid expenses and other

Current assets of discontinued operations

Total current assets

Property and equipment, at cost

Less accumulated depreciation

Property and equipment, net

Property under capital lease

Less accumulated amortization

Property under capital lease, net

Goodwill

Other assets and deferred charges

Total assets

LIABILITIES AND SHAREHOLDERS EQUITY

Current liabilities:

Short-term borrowings

Accounts payable

Accrued liabilities

Accrued income taxes

Long-term debt due within one year

Obligations under capital leases due within one year

Current liabilities of discontinued operations

Total current liabilities

Long-term debt

Long-term obligations under capital leases

Deferred income taxes and other

Redeemable non-controlling interest

Commitments and contingencies

Total liabilities

Shareholders? equity:

Common stock

Capital in excess of par value

Retained earnings

Accumulated other comprehensive income (loss)

Total Walmart shareholders' equity

Noncontrolling interest

Total equity

Total liabilities and shareholders? equity

$203,706

105%

$204,751

106%

$203,105

105%

$193,406

[VD1]Don?t copy this chart but just an example of how you can be imaginativeJ

ACT 5140 - Accounting for Decision Makers Walmart Analysis Assignment Directions: Answer all the questions. Please submit your work in Word or PDF formats only. You can submit an Excel file to support calculations, but please \"cut and paste\" your solutions into the Word or PDF file. Be sure to show how you did your calculations. Also, please be sure to include your name at the top of the first page of your file. Part 1 Perform a vertical and horizontal analysis of Wal-Mart Stores, Inc.'s income statements and balance sheets as of January 31, 2015. In performing this analysis, consider any notable trends or changes that you observe that may provide useful information concerning its financial condition. Also use as many years' worth of statements as you feel necessary. You should write up your results in paragraph form. Part 2 Assess Wal-Mart, Stores Inc. concerning liquidity, solvency, profitability, and stock performance as of January 31, 2015. For each area, you should calculate the ratios we discussed in class and provide an analysis of the ratios calculated. I include historical stock price information and outstanding common share information below. Fiscal Year Ended Adjusted Closing Price Common Shares Outstanding (millions) 1/31/2015 $83.94 3,228 1/31/2014 $71.97 3,233 1/31/2013 $65.79 3,314 1/31/2012 $56.32 3,418 0 ACT 5140 - Accounting for Decision Makers Walmart Analysis Assignment Directions: Answer all the questions. Please submit your work in Word or PDF formats only. You can submit an Excel file to support calculations, but please \"cut and paste\" your solutions into the Word or PDF file. Be sure to show how you did your calculations. Also, please be sure to include your name at the top of the first page of your file. Part 1 Perform a vertical and horizontal analysis of Wal-Mart Stores, Inc.'s income statements and balance sheets as of January 31, 2015. In performing this analysis, consider any notable trends or changes that you observe that may provide useful information concerning its financial condition. Also use as many years' worth of statements as you feel necessary. You should write up your results in paragraph form. Part 2 Assess Wal-Mart, Stores Inc. concerning liquidity, solvency, profitability, and stock performance as of January 31, 2015. For each area, you should calculate the ratios we discussed in class and provide an analysis of the ratios calculated. I include historical stock price information and outstanding common share information below. Fiscal Year Ended Adjusted Closing Price Common Shares Outstanding (millions) 1/31/2015 $83.94 3,228 1/31/2014 $71.97 3,233 1/31/2013 $65.79 3,314 1/31/2012 $56.32 3,418 1 Part 1 - Vertical and Horizontal Analysis Vertical Analysis Vertical analysis is a method in which the relationship between items in the same financial statement is identified by converting all amounts into percentages of the total. This method is also known as the common size as it allows to compare companies of different sizes in the same industry. This type of analysis has two main advantages; the first is that the percentages can be compared over a number of periods allowing to identify unusual changes in the accounts over time. The unusual changes can be further analyzed and action is taken to bring percentages back to normal levels. The second advantage is that financials from companies of different sizes within the same industry can be compared. This type of comparison allows seeing where companies stand versus a particular competitor or the industry. In the case of Wal-Mart the comparison is performed to industry benchmark. The vertical analysis on the income statement is performed by comparing each expense to the net sales and the balance sheet is performed by comparing each asset to the total assets and the liabilities, long term debt and equities are shown as a percentage of the total liabilities and stockholder equity. Income Statement The vertical analysis of Wal-Mart's income statement was performed by dividing each expense over the net sales. This allows to see how each dollar of sales is distrusted among the various costs, expenses and profits. It also allows to see the trends of successive years for these items. For example, -----------------------------------------------------.......... The consolidated net income ------from 2012 to 2013 but then ...in 2014 and ....in 2015. So provide the analysis now Balance Sheet The vertical analysis of Wal-Mart's balance sheet is performed by diving assets as a percentage of total assets and current liabilities, long term debt and equities as a percentage of total liabilities and shareholder's equity. The balance sheet provides internal and external customer and owner's essential information about the company's financial position at a specific moment as it reveals the assets the same thing with balance sheet.............. 2 Horizontal Analysis: Horizontal analysis is a method that shows change in the amounts of financial statement items over a period of time. It is useful to evaluate trends within the company also known as the trend analysis. A base period needs to be establish which is the earliest period being analyzed. The items on the statements after the base period are compared to such. The horizontal analysis main purpose is to see how values change over time and not being utilized or distributed. The base period for the income statement and balance sheet will be 2012 for the purpose of this analysis. Income Statement The horizontal analysis for Wal-Mart's income statement does not show a ... trend. SAME THING HERE Balance Sheet The horizontal analysis for Wal-Mart's balance sheet shows a .... trend. SAME THING HERE.... 3 Part 2 - Ratio Analysis Liquidity Ratios Calculations: Current Ratio: total assets / total current liabilities Working Capital: Total assets - total current liabilities Acid-test ratio: (cash + accounts receivables) / total current liabilities Inventory turnover: cost of sales / average inventory Days sales in inventory: 365 / inventory turnover Accounts receivables turnover: total net sales / average accounts receivables Days sales in receivables: 365 / A/R turnover Free cash flow: Operating cash flow + capital expenditures Average Inventory: (inventory 2015 + inventory 2014)/2 Average A/R: (accounts receivables 2015 + accounts receivables 2014)/2 Liquidity Ratios Fiscal Year Ended 2/1/2015 2/2/2014 2/3/2013 1/29/2012 Current ratio Working capital Acid-test ratio Inventory turnover (times) Days sales in inventory Accounts receivable turnover (times) Days sales in receivables Free cash flow Average inventory Average A/R Analysis: Liquidity ratios determine the company's ability to pay off its short-term debt. The ability to turn shortterm assets into cash to cover debt is very important for investor's fundamental analysis. Wal-Mart's current ratio has been ... much l.....than the current ratio as a core part of their business is being eliminated from the calculation. Overall the liquidity rations have been ................. Long-Term Solvency 4 Calculations: Debt to equity: long-term liabilities / total equity Interest coverage: operating income / interest expense Long-term liabilities: total liabilities - total current liabilities Solvency Ratios Fiscal Year Ended 2/1/2015 2/2/2014 2/3/2013 1/29/2012 Debt to equity Interest coverage Long term liabilities Analysis: The debt to equity ratio has ... Profitability Performance Calculations: Asset turnover: total net revenues / average total assets Return on sales: adjusted net income / total net revenues Gross margin %: (total revenue - cost of sales) / total revenue Return on assets: adjusted net income / average total assets Return on equity: net earnings / average equity Average interest rate: interest expense / average total liabilities Average total assets: (total assets 2015 + total assets 2014)/2 Income tax rate: Provision for income taxes / earnings before income taxes Net of tax interest expense: income tax rate * interest expense Adjusted net income: net earning + net of tax interest expense Average equity: (total shareholders' equity 2015 + total shareholders' equity 2014)/2 Average total liabilities: (total liabilities 2015 + total liabilities 2014)/2 Profitability Ratios Fiscal Year Ended 2/1/2015 2/2/2014 2/3/2013 1/29/2012 Asset turnover Return on sales Gross margin % Return on assets Return on equity 5 Average interest rate Average total assets Income tax rate Net of tax interest expense Adjusted net income Average equity Average total liabilities Analysis: Profitability ratios are important for the analysis of a company as well. They determined the company's bottom line and its return to its investors. The asset turnover ratio indicated that Wal-Mart is using its assets ... DuPont Model - Analysis of ROA Calculations: Product: Return on sales * asset turnover DuPont Analysis of ROA Fiscal Year Ended 2/1/2015 2/2/2014 2/3/2013 Return on assets (calculated) Return on sales Asset turnover Product Analysis: ROA has .... Stock Performance Calculations: Book value per common share: book value of equity / common shares outstanding P/E Ratio: adjusted closing price / earnings per share (diluted) 6 Dividend yield: dividend per share / adjusted closing price Dividend payout: dividend per share / earnings per share (diluted) Adjusted basic EPS: adjusted net income / Weighted average shares outstanding: basic Adjusted diluted EPS: adjusted net income / Weighted average shares outstanding: diluted Adjusted P/E ratio: adjusted closing price / adjusted diluted EPS Adjusted dividend payout: Dividends per share / adjusted diluted EPS Stock Ratios Fiscal Year Ended 2/1/2015 2/2/2014 2/3/2013 1/29/2012 Book value per common share Earnings per share (basic) Earnings per share (diluted) P/E Ratio Dividend yield Dividend payout Adjusted Basic EPS Adjusted Diluted EPS Adjusted P/E Ratio Adjusted dividend payout Book value of equity Common shares outstanding Adjusted closing price Dividends per share Analysis: Wal-Mart is a growing company. The book value has .........CONTINUE THE ANALYSIS 7 APPENDIX A Wal-Mart's Common Size Income Statement WAL MART STORES INC 10-K Income Statement (Amounts in millions except per share data) Fiscal Year Ended January 31, Revenues: Net sales 2015 2014 2013 2012 482,229 473,076 465,604 443,416 2015 % 100.00% 2014 % 100.00% 2013 % 100.00% 2012 % 100.00% Membership and other income Costs and expenses: Cost of sales Operating, selling, general and administrative expenses Gross Margin Operating income Interest: Debt Capital leases Interest expense Interest income Interest, net Income from continuing operations before income taxes Provision for income taxes: Current Deferred 8 Total provision for income taxes Income from continuing operations Income (Loss) from discontinued operations, net of tax Consolidated net income Consolidated net income attributable to noncontrolling interest Consolidated net income attributable to Walmart 9 APPENDIX B Discount Department Stores Industry Benchmark Common Size Income Statement (Data Period 2013) Company Size All Size by Revenue Large Medium Small Over $50M $5M - $50M Under $5M 100% 100% 100% Company Count Net Sales 100% Gross Margin Officer Compensation Advertising & Sales Other Operating Expenses Operating Expenses Operating Income Net Income 10 APPENDIX C Wal-Mart's Common Size Balance Sheet WAL MART STORES INC 10-K Balance Sheet (Amounts in millions except per share data) Fiscal Year Ended January 31, ASSETS Current assets: 2015 2014 2013 2012 2015 2014 2013 2012 % % % % 100.00% 100.00% 100.00% 100.00% Cash and cash equivalents Receivables Inventories Prepaid expenses and other Current assets of discontinued operations Total current assets Property and equipment, at cost Less accumulated depreciation Property and equipment, net Property under capital lease Less accumulated amortization Property under capital lease, net Goodwill Other assets and deferred charges Total assets 203,706 204,751 203,105 193,406 LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities: Short-term borrowings Accounts payable Accrued liabilities 11 Accrued income taxes Long-term debt due within one year Obligations under capital leases due within one year Current liabilities of discontinued operations Total current liabilities Long-term debt Long-term obligations under capital leases Deferred income taxes and other Redeemable non-controlling interest Commitments and contingencies Total liabilities Shareholders' equity: Common stock Capital in excess of par value Retained earnings Accumulated other comprehensive income (loss) Total Walmart shareholders' equity Noncontrolling interest Total equity Total liabilities and shareholders' equity 203,706 204,751 203,105 193,406 100.00% 100.00% 100.00% 100.00% 12 APPENDIX D Discount Department Stores Industry Benchmark Common Size Balance Sheet (Data Period 2013) Company Size Size by Revenue All Large Medium Small Over $50M $5M - $50M Under $5M Balance Sheet Cash Accounts Receivable Inventory Total Current Assets Property, Plant & Equipment Other Non-Current Assets Total Assets Accounts Payable Total Current Liabilities Total Long Term Liabilities Net Worth 13 APPENDIX E Wal-Mart's Trend Analysis Income Statement WAL MART STORES INC 10-K Income Statement (Amounts in millions except per share data) Fiscal Year Ended January 31, Revenues: 2015 % 2014 % 2013 % Base Year 2012 Net sales Membership and other income Costs and expenses: Cost of sales Operating, selling, general and administrative expenses Operating income Interest: Debt Capital leases Interest expense Interest income Interest, net Income from continuing operations before income taxes Provision for income taxes: Current Deferred 14 Total provision for income taxes Income from continuing operations Income (Loss) from discontinued operations, net of tax Consolidated net income Consolidated net income attributable to noncontrolling interest Consolidated net income attributable to Walmart 15 APPENDIX F Wal-Mart's Trend Analysis Balance Sheet WAL MART STORES INC 10-K Balance Sheet (Amounts in millions except per share data) Fiscal Year Ended January 31, ASSETS Current assets: 2015 2014 2013 Base Year 2012 Cash and cash equivalents Receivables Inventories Prepaid expenses and other Current assets of discontinued operations Total current assets Property and equipment, at cost Less accumulated depreciation Property and equipment, net Property under capital lease Less accumulated amortization Property under capital lease, net Goodwill Other assets and deferred charges Total assets LIABILITIES AND SHAREHOLDERS EQUITY 16 Current liabilities: Short-term borrowings Accounts payable Accrued liabilities Accrued income taxes Long-term debt due within one year Obligations under capital leases due within one year Current liabilities of discontinued operations Total current liabilities Long-term debt Long-term obligations under capital leases Deferred income taxes and other Redeemable non-controlling interest Commitments and contingencies Total liabilities Shareholders' equity: Common stock Capital in excess of par value Retained earnings Accumulated other comprehensive income (loss) Total Walmart shareholders' equity Noncontrolling interest Total equity 17 Total liabilities and shareholders' equity $203,706 105% $204,751 106% $203,105 105% $193,406 18 WAL MART STORES INC 10-K Income Statement (Amounts in millions except per share data) Fiscal Year Ended January 31, Revenues: Net sales Membership and other income 2015 2014 2013 2012 $482,229 3,422 $473,076 3,218 $465,604 3,047 $443,416 3,093 485,651 476,294 468,651 446,509 Costs and expenses: Cost of sales Operating, selling, general and administrative expenses 365,086 93,418 358,069 91,353 352,297 88,629 334,993 85,025 Operating income 27,147 26,872 27,725 26,491 Interest: Debt Capital leases Interest expense Interest income 2,161 300 2,461 (113) 2,072 263 2,335 (119) 1,977 272 2,249 (186) 2,034 286 2,320 (161) Interest, net 2,348 2,216 2,063 2,159 Income from continuing operations before income taxes 24,799 24,656 25,662 24,332 Provision for income taxes: Current Deferred 8,504 (519) 8,619 (514) 7,976 (18) 6,722 1,202 Total provision for income taxes 7,985 8,105 7,958 7,924 Income from continuing operations Income (Loss) from discontinued operations, net of tax 16,814 285 16,551 144 17,704 52 16,408 (21) Consolidated net income 17,099 16,695 17,756 16,387 (736) (673) (757) (688) $16,363 $16,022 $16,999 $15,699 $5.01 $0.06 $4.87 $0.03 $5.03 $0.01 $4.55 ($0.01) Consolidated net income attributable to noncontrolling interest Consolidated net income attributable to Walmart Net income per common share: Basic income per common share from continuing operations to Walmart Basic income (loss) per common share from discontinued operations Basic net income per common share attributable to Walmart $5.07 $4.90 $5.04 $4.54 Diluted income per common share from continuing operations to Walmart Diluted income (loss) per common share from discontinued operations $4.99 $0.06 $4.85 $0.03 $5.01 $0.01 $4.53 ($0.01) Diluted net income per common share $5.05 $4.88 $5.02 $4.52 Weighted-average number of common shares: Basic Diluted Dividends declared per common share 3,230 3,243 $1.92 3,269 3,283 $1.88 3,374 3,389 $1.59 3,460 3,474 $1.46 WAL MART STORES INC 10-K Balance Sheet (Amounts in millions except per share data) January 31, ASSETS Current assets: Cash and cash equivalents Receivables Inventories Prepaid expenses and other Current assets of discontinued operations 2015 2014 2013 2012 $9,135 6,778 45,141 2,224 0 $7,281 6,677 44,858 1,909 460 $7,781 6,768 43,803 1,551 37 $6,550 5,937 40,714 1,685 89 Total current assets $63,278 $61,185 $59,940 $54,975 Property and equipment, at cost Less accumulated depreciation Property and equipment, net 177,395 (63,115) 114,280 173,089 (57,725) 115,364 165,825 (51,896) 113,929 155,002 (45,399) 109,603 Property under capital lease Less accumulated amortization Property under capital lease, net 5,239 (2,864) 2,375 5,589 (3,046) 2,543 5,899 (3,147) 2,752 5,936 (3,215) 2,721 Goodwill Other assets and deferred charges 18,102 5,671 19,510 6,149 20,497 5,987 20,651 5,456 $203,706 $204,751 $203,105 $193,406 LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities: Short-term borrowings Accounts payable Accrued liabilities Accrued income taxes Long-term debt due within one year Obligations under capital leases due within one year Current liabilities of discontinued operations $1,592 38,410 19,152 1,021 4,810 287 0 $7,670 37,415 18,793 966 4,103 309 89 $6,805 38,080 18,808 2,211 5,587 327 0 $4,047 36,608 18,154 1,164 1,975 326 26 Total current liabilities 65,272 69,345 71,818 62,300 Long-term debt Long-term obligations under capital leases Deferred income taxes and other Redeemable non-controlling interest 41,086 2,606 8,805 0 41,771 2,788 8,017 1,491 38,394 3,023 7,613 519 44,070 3,009 7,862 404 Total assets Commitments and contingencies 0 0 0 0 Shareholders equity: Common stock Capital in excess of par value Retained earnings Accumulated other comprehensive income (loss) 323 2,462 85,777 (7,168) 323 2,362 76,566 (2,996) 332 3,620 72,978 (587) 342 3,692 68,691 (1,410) Total Walmart shareholders' equity 81,394 76,255 76,343 71,315 Noncontrolling interest 4,543 5,084 5,395 4,446 Total equity 85,937 81,339 81,738 75,761 $203,706 $204,751 $203,105 $193,406 Total liabilities and shareholders equity WAL MART STORES INC 10-K Statement of Cash Flows (Amounts in millions) Fiscal Year Ended January 31, Cash flows from operating activities: Consolidated net income (Income) Loss from discontinued operations, net of tax 2015 2014 2013 $17,099 (285) $16,695 (144) $17,756 (52) Income from continuing operations 16,814 16,551 17,704 Adjustments to reconcile income from continuing operations to net cash provided by operating activities Depreciation and amortization Deferred income taxes Other operating activities 9,173 (503) 785 8,870 (279) 938 8,478 (133) 602 Changes in certain assets and liabilities, net of effects of acquisitions: Increase in accounts receivable Increase in inventories Increase in accounts payable Increase in accrued liabilities (Decrease) Increase in accrued income taxes (569) (1,229) 2,678 1,249 166 (566) (1,667) 531 103 (1,224) (614) (2,759) 1,061 271 981 Net cash provided by operating activities 28,564 23,257 25,591 Cash flows from investing activities: Payments for property and equipment Proceeds from disposal of property and equipment Proceeds from disposal of certain operations Other investing activities (12,174) 570 671 (192) (13,115) 727 0 (138) (12,898) 532 0 (271) Net cash used in investing activities (11,125) (12,526) (12,637) Cash flows from financing activities: Net change in short-term borrowings Proceeds from issuance of long-term debt Payment of long-term debt Dividends paid Purchase of Company stock Dividends paid to noncontrolling interest Purchase of noncontrolling interest Other financing activities (6,288) 5,174 (3,904) (6,185) (1,015) (600) (1,844) (409) 911 7,072 (4,968) (6,139) (6,683) (426) (296) (260) 2,754 211 (1,478) (5,361) (7,600) (282) (132) (58) Net cash used in financing activities (15,071) (10,789) (11,946) Effect of exchange rates on cash (514) (442) 223 Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year 1,854 7,281 (500) 7,781 1,231 6,550 Cash and cash equivalents at end of year $9,135 $7,281 $7,781 Supplemental disclosure of cash flow information Income tax paid Interest paid 8,169 2,433 8,641 2,362 7,304 2,262 2012 $16,387 21 16,408 8,106 1,050 468 (796) (3,727) 2,687 30 29 24,255 (13,510) 580 0 (3,679) (16,609) 3,019 5,050 (4,584) (5,048) (6,298) (526) 0 (71) (8,458) (33) (845) 7,395 $6,550 5,889 2,346 NOTES FOR HORIZONTAL AND VERTICAL ANALYSIS Horizontal analysis (also known as trend analysis) is a financial statement analysis technique that shows changes in the amounts of corresponding financial statement items over a period of time. It is a useful tool to evaluate the trend situations. The statements for two or more periods are used in horizontal analysis. The earliest period is usually used as the base period and the items on the statements for all later periods are compared with items on the statements of the base period. The changes are generally shown both in dollars and percentage. Dollar and percentage changes are computed by using the following formulas: Horizontal analysis may be conducted for balance sheet, income statement, schedules of current and fixed assets and statement of retained earnings. Example: An example of the horizontal analysis of balance sheet, schedule of current assets , income statement and statement of retained earnings is given below: Comparative balance sheet with horizontal analysis: Comparative schedule of current assets: Comparative income statement with horizontal analysis: Comparative retained earnings statement with horizontal analysis: In above analysis, 2007 is the base year and 2008 is the comparison year. All items on the balance sheet and income statement for the year 2008 have been compared with the items of balance sheet and income statement for the year 2007. The actual changes in items are compared with the expected changes. For example, if management expects a 30% increase in sales revenue but actual increase is only 10%, it needs to be investigated. Vertical analysis (also known as common-size analysis) is a popular method of financial statement analysis that shows each item on a statement as a percentage of a base figure within the statement. To conduct a vertical analysis of balance sheet, the total of assets and the total of liabilities and stockholders' equity are generally used as base figures. All individual assets (or groups of assets if condensed form balance sheet is used) are shown as a percentage of total assets. The current liabilities, long term debts and equities are shown as a percentage of the total liabilities and stockholders' equity. To conduct a vertical analysis of income statement, sales figure is generally used as the base and all other components of income statement like cost of sales, gross profit, operating expenses, income tax, and net income etc. are shown as a percentage of sales. In a vertical analysis the percentage is computed by using the following formula: A basic vertical analysis needs an individual statement for a reporting period but comparative statements may be prepared to increase the usefulness of the analysis. Example: An example of the vertical analysis of balance sheet and income statement is given below: Comparative balance sheet with vertical analysis: Current assets: 2008: (550,000 / 1,139,500) 100 = 48.3%2007: (530,000 / 1,230,500) 100 = 43.3% Comparative income statement with vertical analysis: Cost of goods sold: 2008: (1,043,000/1,498,000) 100 = 69.6%2007: (820,000/1200,000) 100 = 68.3% Vertical analysis states financial statements in a comparable common-size format (percentage form). One of the advantages of common-size analysis is that it can be used for inter-company comparison of enterprises with different sizes because all items are expressed as a percentage of some common number. For example, suppose company A and company B belong to same industry. A is a small company and B is a large company. Company A's sales and gross profit are $100,000 and $30,000 respectively whereas company B's sales and gross profit are $1,000,000 and $300,000 respectively. If vertical analysis is conducted and sales figure is used as base, it would show a gross profit percentage of 30% for both the companies as shown below: Company A and B Comparative Income Statement For the year ended....... Sales Cost of goods sold