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Posted on Jun 13, 2024

(PART A: WALMART)This homework is about Walmart (NYSE: WMT). The questions you are required to answer relate to margins, cash flows, and working capital metrics.

(PART A: WALMART)This homework is about Walmart (NYSE: WMT). The questions you are required to answer relate to margins, cash flows, and working capital metrics. Express all margin answers using a percent symbol and to two decimal place (i.e., XX.XX%).

[1 POINT EACH]

The following questions are based on the information disclosed in Walmart's Fourth Quarter (Q4) News Release, dated February 19, 2019:

1. What is the name of Walmart's CEO and President?

2. How much operating cash flow did Walmart generate in Fiscal 2019?

3. How much provisional benefit did Walmart record as a result of the tax reform per share?

4. How many associates do Walmart employ worldwide as of Fiscal 2019?

 Based on the income statement:5. Compute the gross margin (%) for Q4 of 2019 (excluding membership and other income).

6. Compute the gross margin (%) for the same period of 2018 (excluding membership and other income).

7. Compute the operating margin (%) for Q4 of 2019 (use total revenue).

8. Compute the operating margin (%) for the same period of 2018 (use total revenue).

9. Compute the net margin (%) for Q4 of 2019 (excluding noncontrolling interest and use total revenue).

10. Compute the net margin (%) for the same period of 2018 (excluding noncontrolling interest and use total revenue).

Walmart K Walmart U.S. Q4 comp sales" grew 4.2%% and Walmart U.S. eCommerce sales grew 43%, 04 2019 GAAP EPS of $1.27; Adjusted EPS' of $1.41, Fiscal year 2019 GAAP EPS of $2.26; Adjusted EPS" of $4.91. Company reiterates fiscal 2020 guidance Fourth-quarter highlights Total revenue was Si ke 8 billion, an increase of $2.5 billion, or 1.50%. Leduding currency", total revenue "Wehad a good year, and I want to thank our associates was $140.5 billion, an increase of $4.2 billion, or 3.1%%. for their great work and openness to change. They continue to brapire us as we strive to serve our Walmart U.S. comp sales" on a two year stack of 5.8%% customers better every day, Progress on initiatives to is the strongest growth in 9 years accelerate growth, along with a favorable economic Walmart U.S. eCommerce continued to benefit from environment, helped us deliver strong comp sales and the expansion of grocery pickup and delivery and a gain market share. We're excited about the work we're broader assortment on Walmart.com. doing toreach customers in a more digitally-connected way. Our commitment to the customer is clear - we'll Sam's Club comp sales" increased 1.3% , and be there when, where and how they want to shop and e Commerce sales grew 215%. deliver ne, convenient experiences that are uniquely > CH NY10 04 FY18 change FYI FT18 Revenue 514.1 Revenue (constant currency!' 54.3 LIN 5151 5900 514.1 Operating income 515 5230 Operating income [constant currency!" al week perlod en did imwary 35, 2015 rompand Ic 30-wit IFrunchai intimationFree Cash Flow FY19 $ Chance Returns to Shareholders FY19 X Change Operating cash flow $278 50.6 Dividends 56.1 0.3% Capital expenditures $101 Share repurchases" 574 Free cash flow 517.4 50.9 Total 513.5 6.3N Fiscal 2020 full year guidance The company reiterates the following guidance, which was originally provided at its meeting for the investment community on October 16, 2018. Assumptions in the guidance indude that economic conditions, currency rates and the tax and regulatory landscape in our largest markets remain generally consistent. Additionally the guidance assumes no further change in fair value of the company's equity investment in JD). com. Metric #Y20 Guidance Consolidated net sales At least 3 percent in constant currency, affected; growth Positively by the acquisition of Hipkart Negatively by deconsolidation of Walmart Brazil Negatively by planned tobacco sales reduction at Sam's Club Comp sakes growth Walmart U.5 :+2.5 percent to +3 percent, exduding fuel Sam's Club: around +1 percent, excluding fuel around +3 percent, excluding fuel and tobacco Walmart US, eCommerce Around 35 percent met sales growth Walmart International net Around 5 percent in constant currency sales growth Consolidated Operating Dedine by a low single-digit percentage range, including Hipkart Income Increase by a low single digit percentage range, excluding Flipkart LPS Decline by a low single-digit percentage range compared with 1 719 adjusted LPS Increase by a low to mid single digit percentage range compared with FY19 adjusted LPS, excluding Hipkart Effective tax rate Approximately 26 5 percent - 27.5 percent Lepenye leverage ely 20 bps Walmart US. grocery pickup and delivery Approximately 3, 100 grocery pickup locations by year-end F120 Approximately 1,600 grocery delivery locations by year-end FY20 Capital expenditures Approximately $11 billion Strong focus on store remodels, customer initiatives, eCommerce, technology and supply chain New Units Walmart U.S. expects to open fewer than 10 stores Walmart International expects to open slightly more than 300 new stores primarily in Walmex and ChinaSegment results in the first quarter of fiscal 2019, the company revised its corporate overhead allocations to the operating segments. Accordingly previous segment operating income was recast to be comparable to the current period. Walmart > U.S. 04 FY19 04 FY18 Change FT19 FYLB Change Net sales $907 $132 Comp sales (ex fuel) 4.20 2.65% 160 bps 3.5% 2.15% WN 150 bps WA Traffic WN 70 bps HP NP NP HP Ticket 10% 250 bps NIA NP NP NP HP WN eCommerce -180bps -60 bps -120 bps HP NP HP NP Operating income 55.0 SA.7 SOB 7.3X 517.4 $17.0 Walmart >'s F718 Charge FY19 FYLB international Change Net jokes 5101 -50 0 $1208 $1141 $24 Net sales (cordtant currency) $34.0 533.1 509 274 $1215 5118.1 9 535 29% Operating income 512 Operating income [constant currency 5- Sam's Club 04 Fr19 Change Frig Change Net sales 514.9 $15.5 $59.7 $1.4 2.3% Comp sales (ex fuel)" 24% 90 bps 20 120 564 WA Traffic 210 bps HP HP NP NP 3.IN 19% 120 bps HP HP NP NP eCommerce ~90 bps -10 bps NP NP NP NP Operating income 50.4 SO.E SO.7 51.5 50.9 56.15Counters Eriei Fiscal Thins Erdai Amounts la roliang, socopi por stuare dahad Parent 3187.709 1905.160 205 1110m 224 Oumrating income Provision for incant lanes Consol dided cel irooms Corneldied nal beers airbuath to narcontroling Inand Consol dated net Income sirbuiable to Walmart Net Income per common share: Oasis nal beane per con nion share airbus35 to Walmart 1.27 5 O.T4 TIES 5 27 5 1.2F 5 25 5 Welshled-averagp common shares outstanding: 2014 3010 Oleidand's declared per eemman chats 20 5 20(Unaudited) Gunreal assets Prepaid esparza and efor Toid current: wa wa Property and equipment: Paperly order gaphal lease ared financing obligations 12.703 Property wide capital lease and franohp oblig ations, set 21. 181 Total assets HARTITLES AND EQUITY 2214 Long undet Long term tryhal lease and franciay obligmoors Equity 110.181 Toid Wal uri show hokianal aqua Teal equity Total Isbillalas and equity 21 328Consolidated Statements of Cash Flows [Umaudited) Fiscal Years Ended Consolidated nathneara T.IM 10 323 Dopeirton and amortirrior Uneupload [goina j and katans I Garn ) and barns la dipaud of buchwawa operations Deterred incomes Luxea 3135 Change howtah unwet and latisha, ne of which of mcquations 11431 143 Hilemah provided by operating action Cash flown ten Ineasting sciMilk From farpepary and equiprant Proceed from the clapour of property and aquiprint Proceeds from dapcual of certain epastora Print far bushman nequations, nat of cash acquind (14,0541 Hitemhuledin mazing kaylin 24031 Cash flown tom financing actlike Not change in shorHarm bonswings 4.148 Hepayment of long-term debt Dividends paid 1 120 Purchase of Compary soc Dividends paid mo norcontroling inew Purchase of noeconoling inbored Not enthused in fhanding coMites Effect of en change utes on dish, eith erancients and marioed cash 11311 Cash cash scuiv bri and notcad onhat by ting of par 1 144 Cash, cush equivalents and muscled anh a and of period 7014Walmart Inc. Supplemental Financial Information (Unaudited) Net sales and operating income Opording Income Three Months Ended Three Months Ended January 31. January 31, fdollars to millions) 2015 2015 Change 2019 2018 Fercent Change Walmart U.S. 90.520 5 98 570 5,043 5 4 701 7.3% Walmart International 32 217 33,092 1,170 1 208 Sam's Club 14 905 15 470 3.79 414 -308 HMM Corporate and support NIA -1 224 -54.2% Consolidated $ 137 743 5 135, 150 5 6,087 5 4 407 Not Balca Operating Incoma Fiscal Years Ended Fiscal Years Ended January 31, January 31, Percent Percent (dollars in millions! 2019 2018 Change 2019 2018 Change Walmart U.S. 5 301,406 5 318, 477 4.198 $ 17,3 86 5 15 505 2.3% Walmart Intemational 120 824 118 058 2.3 4 8 83 5.220 Sam's Club 57 830 50 216 1,520 50. 190 Compomie and support 1,832 -2.702 -32.2 Consolidated $ 510 320 5 495 751 $ 21,057 5 20 437 TAX U.S. comparable sales rowits Mith Fual Wihout Fuel Fuel impact 13 Weeks Ended 13 Weeks Ended 13 Weeks Ended 1/25 2018 1/20/2018 1/25/2019 1 282018 1/252010 1/26/2018 Walmart U.S. 42% 2.75 12% 25%% 0.1%% Sam's Club 3.8% 12% Total US. 4.15% 25%% 0.15% 02% With Fual Without Fuel Fuel impact 52 Wegks Ended 52 Weeks Endad 52 Weeks Ended 1/25/2019 1/26/2015 1/25 2019 1 26/2015 1/25/2019 1/25/2018 Walmart U.S. 2.2% 3.5% 2.15% 0.15% D.15% Sam's Club 5.5%% 305 3.595 2.095 1.795 Total US 2.395 3.59 2.195Walmart Inc. Reconciliations of and Other Infomation Regarding Non-GAAP Financial Measures [Unaudited] The following information provides reconciliations of certain non-GAAP financial measures presented in the press release to which this reconciliation is attached to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The company has provided the mon-GAAP financial information presented in the press release, which is not calculated or presented in accordance with GAAP, ma information supplemental and in addition to the financial measures presented in the press rolcine that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior io, as a substitute for or alternative to, and should be considered in conjunction with, the GAAF financial measures presented in the press release. The non-GAAP financial measures in the press release may differ from similar measures used by other companies. Constant Currency In discussing our operating results, the term currency exchange rates refers to the currency exchange rates we use to convert the operating results for countries where the functional currency is not the U.S. dollar into U.S. dollars or for countries experiencing hyperinflation. We calculate the effect of changes in currency exchange ratus as the difference between cununi period activity translated using the current period's currency exchange rates and the comparable prior year period's currency exchange rates. Additionally, no cunancy exchange rate fluctuations are calculated for non-USD acquisitions unil owned for 12 months. Throughout our discussion, we refer to the results of this calculation as the impact of currency exchange rate fluctuations. When we refer to constant currency operating rusulls, this means operating results without the impact of the currency exchange rate fluctuations. The disclosure of constant currency amounts or results permits investors to better understand Walmart's underlying performance without the effects of currency exchange rate Fluctuations The table below reflects the calculation of constant currency for total revenues, net sales and operating income for the three and twelve months ended January 31. 2018. Three Monthi Ended January 31. Twelve Months Ended January 31. Walmart Comsolidified Camiel dated 2018 2019 Percent Pongant Dollars in mlionsi change change 2018 Total revenues -247 5 130. 763 1.91 5 122.140 20%% 5014 405 20% Cuvery tochange idle lodtuition NIA 702 705 Constant cumuncy todid raisenica 20% $ 140.485 3.1% $ 122 045 20% $ 22317 23% $ 137.743 1.9% $120.024 23% 5010.320 Cumercy tochange male fluctuations HIA Constant cumuncy not solid $ 37.897 $ 139 423 32A $12153 29%% 501 1.037 Openiling income: As reportid 1.170 065 5 21.857 Luparty tochange male fudtuitions Constant cumuncy operating income 1.203 21.958 Change versus prix your comparable periodFree Cash Flow We define free ensh flow as net cash provided by operating activities in a period minus payments for property and equipment made in that period. We had net cash provided by operaing activities of 527 8 billion for the twelve months ended January 31, 2019, which declined when compared to $28.3 bilion for the twelve months ended January 31, 2018 primarily due to timing of vendor payments, partially offset by lower tax payments mainly resulting from Tax Reform and the timing of tax payments. We penemied free cash flow of 317.4 billion for the twelve months ended January 31, 2019, which declined when compared to $18.3 billion for the twelve months ended January 31, 2018 due to the same reasons as the decline in net cash provided by operating activities, as well as 403 billion in increased capital expenditures Free cash flow is considered a non-GAAP financial measure. Management believes, however, that frue cash flow, which measures our ability to generate additional cash from our business operations, is an important financial mussure for use in exslusting the company's financial performance. Free cash flow should be considered in addition to, rather than as a substitute for consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity Additionally, Walmart's definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures, due to the fact that the measure does not deduct the payments required for dubi service and other contractual obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our Consolidated Statements of Cash Flows Although other companies report their free cash flow, numerous methods may exist for calculating a company's free cash flow. As a result. the method used by Walmart's management to calculate our free cash flow may differ from the methods used by other companies to calculate their free cash flow The following table gats forth a reconciliation of free cash flow, a non-GAAP financial measure, to not cash provided by operating activities, which we believe to be the GAAP financial messure most directly comparable to true cash flow, as well as information regarding net cash used in investing activities and net cash used in financing activities. Fiscal Year Ended JJanuary 31. 2010 2018 Net cash provided by operating activities 27,1 Papments for property and equipment (oaphial expandtures? 10-744 10.041 Free cash flow 18 298 Net cash used in Investing acivies 24.030 9.078 Net cash used in foureng act stions a the hebdod in cur compuinton of keechAdjusted EPE Adjusted diluted camings per share atinbutable to Walmart (Adjusted EPS] is considered a non-GAAP financial measure under the SEC's rules because it excludes certain amounts not excluded in the diluted enmings per share attributable to Walmart calculated in accordance with GAAP (EPS), the most directly comparable financial measure calculated in accordance with GAAR. Management believes that Adjusted EP3 is a meaningful measure to share with investors because it best allows comparison of the performance for the comparable period. In addition, Adjusted EP3 affords investors a view of what management considers Walmart's core camings performance and the ability to make a more informed assessment of such core eamings performance. We have calculated Adjusted EPS for the three months and fiscal year ended January 31, 2019 by adjusting EPS for the following: (1) adjustments in the provisional amount related to Tax Reform. (2) unrealized gains and losses on the company's equity investment in JD com and 13) for the fiscal year ended January 31, 2018 only. the loss on sale of a majority stake in Walmart Brazil. We adjust for the following two tems on a recurring basis each quarter; Tax Reform - The SEC allowed companies to record provisional amounts during a one year measurement period from the U.S. Tax Reform enactment date. While the company recorded provisional amounts in fiscal 2018, the company adjusted such provisional amounts during fiscal 2019. As the company adjusted EPS in fiscal 2018. for consistency, the company also adjusted EPS in fiscal 2018 for changes to the provisional amounts. This is the last quarter the company will adjust for Tax Reform. Unrealzod gains and losses - Beginning in fiscal 2018, due In a change in U. S. accounting principles, Walmart is required to include unrealized gainedlosses of curtain equity investments within net income. The company's unrealized gains/losses primarily relate to Walmart's equity investment in JUlycom. While the company's inrustment in JU .com was a shalegie decision for the company's retail operations in China, management's mussungment of that strategy is primarily focused on the Walmart China financial results rather than the investment value of Dycom. Additionally, management does not forecast changes in fair value of its equity inwustments. Accordingly. management adjusts EPS for the unrealized JD.com investment gains losses Three Months Ended January 31, 2010 Diluted earnings per share: Reported EPS 1.27 Adjustments; Pmo-Tax Impact Tar Impart" Not Impact Unrealized [gains] and losses on JO.com investment 0.03 Adjustment to provisional amount for Tax Reform OHIT 017 Net adjustments 0.14 Adjusted EPS 1.41 Fiscal Year Ended January 31, 2019" Diluted earnings per share: Reported ERS 2 26 Adjustments: Pro-Tar Tax Impact Hai impact Loss on sale of majority stake in Walmart Brazil 1 84 -0.10 1.54 Unrealized Igains) and losses on JD.com investment 120 Adjustment to provisional amount for Tax Reform 0.18 0.19 Net adjustmonks 2 05 Adjusted EPS 181 "Grained bried on nature of item, including ary realcable Undettions. and saleor rule is offood for relevant jurisdictions "Quarterly net impact: of Individual adjustman's or Adusad EPS muay not sum to Tio nal impact of individual adjustment or VID AgonhadEPS due to rounding. Additionally, the sum of all individual adjustments may not sum due to rounding.As previously disclosed in our fiscal year ended January 31, 2018 press release, we have calculated Adjusted EFS for the three months and the fiscal year ended January 31, 2018 by adjusting EPS for the following: (1) restructuring charges, (2) losses on the early extinguishment of certain debt, (3) asset impairments and write-offs. (4) U.S associate lump sum bonuses, (5) the impact of U.S. Tax Reform, (8) a legal settlement recovery and, for the fiscal year ended January 31, 2018 only, the (7) the FCPA accrual based on discussions with government agencies regarding the possible resolution of the FCPA matter and (8) the gain on sale of Suburbia. The most directly comparable financial measure calculated in accordance with GAAP & EPS. Three Months Ended January 31. 2010 Diluted earnings per share: Reported EPS Adjustments: Pre-Ta's NCI Impact Impact Impact Hod Impact Restructuring charges 0.40 -0.12 0.20 Loss on extinguishment of debt 0.34 0. 19 0.21 Asset impairments and write-offs 0. 10 -0.06 0.12 Associate lump sum bonus 0,15 U.8. Tax Reform benefit -0.07 Legal settlement recovery -0.05 0.02 Net adjustments Adjusted EPS 1.30 Fiscal Year Ended January 31, 2010 Diluted earnings per share: Reported EPS 3.28 Adjustments: Pro-Tax Tax NCI Not Impact Loss on extinguishment of debt -018 Restructuring charges" 0 40 -0.12 Asset impairments and write-offs" 0.23 0.10 FCPA neerual Associate lump sum bonus 0. 15 -0.06 US Tax Reform benefit Gain on sale of Suburbha -0. 13 0104 0.04 -0105 Legal settlement recovery -0.05 0.02 Net adjustments 1.14 Adjusted EPS 4,42 "Raubud during chargea Include 50.30 for reatructuringp In the U.5, primary'relating to Sam's Club sless closures and Hare Oflos saveranca and it to tor Walran ted toadd piearly due to be wihdap down of to try party bvol choreoace operations wants and write offs for Cold indates $9 06 of impairment charges due to decisions ta daoortive totals real eddle poets of Walmart L. S. and Bur's Club and lochnoicey sanaa at Coppouda, and 5:0.04 to to write-of of curtain mast at Volmad Irimiional