Revenue Recognition for Walmart and Amazon. Revenue is the largest item on the income statement, and we must assess it on a quantitative and qualitative basis.
Use horizontal analysis to identify any time trends.
Compare the horizontal analyses of the two companies.
Consider the current economic environment and the companies competitive landscape.
Given they operate in the same industry, you might expect similar revenue trends. Read the managements discussion and analysis (MD&A) section of the 10-K to learn how the companies senior managers explain revenue levels and changes. Our goal is to determine whether each companys revenue levels and changes seem appropriate and in line with external factors. Additional analysis: (a) If the company distinguishes among types of revenue on the income statement, use horizontal and vertical analyses to identify any changes in the product line mix or where sales are growing most quickly. Find the footnote on segment revenues and profits, and identify trends or significant changes. (b) Assess each companys revenue recognition policy by comparing it with the other and with those of some other close competitors. (c) Consider unearned revenue on the balance sheet. How big is it (common size), and is it fluctuating over time? (d) For companies that operate globally, determine the effect of foreign currency fluctuations on revenue. If these are substantial year after year, it might indicate that managers are not effectively hedging, and this would warrant additional investigation.
Walmart & Amazon Balance Sheets Amazon Consolidated Balance Sheets - USD ($) $ In Millions Dec. 31, 2019 Dec. 31, 2018 % of 2019 % of 2018 16.0% 8.4% 9.1% 9.2% 19.5% 5.8% 10.6% 10.3% $36,082 18,929 20,497 20.816 96,334 72,706 25,141 14,754 16,314 225,248 $31,750 9,500 17,174 16,677 75,101 61,797 0 14,548 11,202 162,648 323% 11.2% 6.6% 7.2% 100.0% 38.0% 0.0% 8.9% 6.9% 100.0% 20.9% 14.4% 3.6% 23.5% 14.5% 4.0% Current assets: Cash and cash equivalents Marketable securities Inventories Accounts receivable, net and other Total current assets Property and equipment, net Operating leases Goodwill Other assets Total assets Current liabilities: Accounts payable Accrued expenses and other Uneamed revenue Total current labilities Long-term lease liabilities Long-term debt Other long-term liabilities Commitments and contingencies (Note 7) Stockholders' equity: Preferred stock, $0.01 par value: Authorized shares - 500 Issued and outstanding shares - none Common stock, $0.01 par value: Authorized shares - 5,000 Issued shares - 507 and 514 Outstanding shares - 484 and 491 Treasury stock, at cost Additional paid-in capital Accumulated other comprehensive Income (loss) Retained earnings Total stockholders' equity Total liabilites and stockholders' equity 47,183 32,439 8,190 87,812 39,791 23,414 12,171 38,192 23,663 6,536 68,391 9,650 23,496 17,563 17.7% 10.4% 5.4% 5.9% 144% 10.8% 0 5 OMO 0.002% 0.003% -1,837 33,658 -986 31,220 62,060 $ 225 248 -1,837 26,791 -1,035 19,625 43.549 $162648 0.8% 14.9% -0.4% 13.9% -1.1% 16.6% -0.6% 12.1% 100.0% 100.0% Focus ish US Virgin Islands) Jan. 31, 2019 Jan. 31, 2018 %0 2019 % of 2018 $7,722 6,283 44,269 3,623 61,897 $ 6,756 5,614 43.783 3.5% 29% 202% 1.7% 28.2% 3.3% 27% 214% 1.7% 29.24 3,511 59,664 185,810 (81,493) 104, 317 185,154 17,479 107 675 84.7% 37.2% 47.6% 90.5% -37.9% 52.6% Walmart Consolidated Balance Sheets - USD ($) $ In Millions Current assets: Cash and cash equivalents Receivables, net Inventories Prepaid expenses and other Total current assets Property and equipment: Property and equipment Less accumulated depreciation Property and equipment, net Property under capital lease and financing obligations: Property under capital lease and financing obligations Less accumulated amortization Property under capital lease and financing obligations, net Goodwill Other long-term assets Total assets Current liabilities: Short-term borrowings Accounts payable Accrued liabilities Accrued income taxes Long-term debt due within one year Capital lease and financing obligations due within one year Total current liabilities Long-term debt Long-term capital lease and financing obligations Deferred income taxes and other Commitments and contingencies Equity Common stock Capital in excess of par value Retained earnings I Accumulated other comprehensive loss Total Walmart shareholders' equity Noncontrolling interest 12,760 5.682) 7,078 31,181 14,822 219.296 12,703 (5,560) 7,143 18.242 11,798 204,522 5.8% -26% 32% 142% 6.8% 100.0% 6.2% -27% 3.5% 8.9% 5.8% 100.0% 5225 47060 22,159 428 1,878 729 77477 43,520 6,683 11.981 5.257 46,092 22,122 645 3,738 667 78.521 30.045 6.780 8,354 24% 21.5% 10.1% 02% 0.9% 0.3% 35.3% 19.8% 3.0% 5.5% 26% 22.5% 10.8% 0.3% 1.8% 0.3% 38.4% 14.7% 3.3% 4.1% 0.1% 288 2,965 80.785 (11,542) 72496 2138 296 2,648 85,107 (10,181) 77,869 2953 36.8% 53% 33.1% 33% 0.1% 1.3% 41.6% -50% 38.15 Focus English (US Virgin Islands) Total egy Total abilities and equity 79.834 $ 219,286 80,822 $ 204.522 36.3% 100.0% 30.5% 100.0% Walmart & Amazon Income Statements Jan. 31, 2019 12 Months Ended Jan. 31, 2018 Jan. 31, 2017 2019 % of Total Revenue 2018 2017 $ 510,329 4,076 514,405 $ 496,761 4582 500 343 $ 481,317 4,556 485,873 361256 385,301 107,147 21,957 373,396 106,510 20,437 101,853 22,764 74.9% 20.8% 4.3% 74.6% 21.3% 74.4% 20.9% 47% Walmart Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions Revenues: Net Sales Membership and other income Total revenues Costs and expenses: Cost of sales Operating seling, general and administrative expenses Operating income Interest: Debt 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 ne income attributable to Walmart Net Income per common share: Basic net income per common share attributable to Walmart Diluted net income per common share attributable to Walmart Weighted-average common shares outstanding Basic Diluted Dividends dedared per common share 1 1,975 371 (217) 2.129 O 8,368 11460 4281 7,179 (509) $6,670 1,978 352 (152) 2,178 3.138 0 15.123 4,600 10,523 (661) $ 9,862 2,044 323 (100) 2,267 0 0 20,497 6.204 14.293 (650) $ 13,643 0.4% 0.1% -0.04% 0.4% 0% 1.8% 22% 0.8% 14% 0.1% 13% 0.4% 0.1% -0.03% 0.4% 0.6% 0% 3.0% 0.9% 2.15 -0.1% 1.9% 04% 0.1% -0.02% 0.5% 0% 08 42% 1.3% 2.9% -0.1% 28% $ 228 $ 226 $3.29 $328 $440 $438 2,929 2,945 $ 208 2.995 3,010 $2.04 3,101 E 112 $ 2 & Focus English (U.S. Virgin Islands) 12 Months Ended Dec 31, 2018 $ 232.887 Dec 31, 2019 $ 280,522 2019 % of Net Sales 2018 2017 Dec 31, 2017 $177,886 165,536 40,232 35,931 18,878 5,203 201 265 981 14,541 Amazon Consolidated Statements of Income - USD ($) shares in Millions, $ In Millions Total net sales Operating expenses Cost of sales Fulfilment Technology and content Marketing General and administrative Other operating expense (income) net Total operating expenses Operating income Interest income Interest expense Other income (expense.net Total non-operating income (expense) Income before income taxes Provision for income taxes Equity method investment activity, net of tax Net income Basic earnings per share Diluted earnings per share Weighted average shares used in computation of earnings per share: Basic (in shares) Diluted in shares) Net product sales Total net sales Net service sales Total net sales 139,156 34,027 28,837 13,814 4,336 296 220,466 12,421 440 (1417) (183) (1,160) 11.261 (1.197) 9 $ 10,073 $20.68 $ 20.14 111.934 25,249 22620 10,069 3,674 214 173,760 4,108 202 (848) 346 (300) 3.806 (789) 58.01% 59.8% 14.3% 14.6% 12.8% 12.4% 5.9% 1.9% 1.9% 0.1% 0.1% 9488 94.7% 52% 53% 0.3% 02% -0.6% 0.6% 0.07% -0.2% 05% 5.0% 48% 0.8% -0.5% -0.0040.003% 41% 62.9% 14.2% 12.7% 57% 21% 0.1% 97.7% 23% 0.1% -0.5% 02% -0.2% 218 (1,600) 203 (565) 13,976 (2374) (14) $ 11,588 $ 23.46 $ 23.01 -0.002% 43% $3.033 $6.32 $6.15 494 504 480 493 500 $160 408 $ 141,915 $ 118,573 $ 120, 114 $ 90,972 559293 Operating Income was considerably high in 2018 and 2019 for both companies. There has been a major increase in Amazon's net income over the past three years, however, Walmart's net income has been decreasing 's Focus English (U.S. Virgin Islands) wix] 9P Walmart & Amazon Balance Sheets Amazon Consolidated Balance Sheets - USD ($) $ In Millions Dec. 31, 2019 Dec. 31, 2018 % of 2019 % of 2018 16.0% 8.4% 9.1% 9.2% 19.5% 5.8% 10.6% 10.3% $36,082 18,929 20,497 20.816 96,334 72,706 25,141 14,754 16,314 225,248 $31,750 9,500 17,174 16,677 75,101 61,797 0 14,548 11,202 162,648 323% 11.2% 6.6% 7.2% 100.0% 38.0% 0.0% 8.9% 6.9% 100.0% 20.9% 14.4% 3.6% 23.5% 14.5% 4.0% Current assets: Cash and cash equivalents Marketable securities Inventories Accounts receivable, net and other Total current assets Property and equipment, net Operating leases Goodwill Other assets Total assets Current liabilities: Accounts payable Accrued expenses and other Uneamed revenue Total current labilities Long-term lease liabilities Long-term debt Other long-term liabilities Commitments and contingencies (Note 7) Stockholders' equity: Preferred stock, $0.01 par value: Authorized shares - 500 Issued and outstanding shares - none Common stock, $0.01 par value: Authorized shares - 5,000 Issued shares - 507 and 514 Outstanding shares - 484 and 491 Treasury stock, at cost Additional paid-in capital Accumulated other comprehensive Income (loss) Retained earnings Total stockholders' equity Total liabilites and stockholders' equity 47,183 32,439 8,190 87,812 39,791 23,414 12,171 38,192 23,663 6,536 68,391 9,650 23,496 17,563 17.7% 10.4% 5.4% 5.9% 144% 10.8% 0 5 OMO 0.002% 0.003% -1,837 33,658 -986 31,220 62,060 $ 225 248 -1,837 26,791 -1,035 19,625 43.549 $162648 0.8% 14.9% -0.4% 13.9% -1.1% 16.6% -0.6% 12.1% 100.0% 100.0% Focus ish US Virgin Islands) Jan. 31, 2019 Jan. 31, 2018 %0 2019 % of 2018 $7,722 6,283 44,269 3,623 61,897 $ 6,756 5,614 43.783 3.5% 29% 202% 1.7% 28.2% 3.3% 27% 214% 1.7% 29.24 3,511 59,664 185,810 (81,493) 104, 317 185,154 17,479 107 675 84.7% 37.2% 47.6% 90.5% -37.9% 52.6% Walmart Consolidated Balance Sheets - USD ($) $ In Millions Current assets: Cash and cash equivalents Receivables, net Inventories Prepaid expenses and other Total current assets Property and equipment: Property and equipment Less accumulated depreciation Property and equipment, net Property under capital lease and financing obligations: Property under capital lease and financing obligations Less accumulated amortization Property under capital lease and financing obligations, net Goodwill Other long-term assets Total assets Current liabilities: Short-term borrowings Accounts payable Accrued liabilities Accrued income taxes Long-term debt due within one year Capital lease and financing obligations due within one year Total current liabilities Long-term debt Long-term capital lease and financing obligations Deferred income taxes and other Commitments and contingencies Equity Common stock Capital in excess of par value Retained earnings I Accumulated other comprehensive loss Total Walmart shareholders' equity Noncontrolling interest 12,760 5.682) 7,078 31,181 14,822 219.296 12,703 (5,560) 7,143 18.242 11,798 204,522 5.8% -26% 32% 142% 6.8% 100.0% 6.2% -27% 3.5% 8.9% 5.8% 100.0% 5225 47060 22,159 428 1,878 729 77477 43,520 6,683 11.981 5.257 46,092 22,122 645 3,738 667 78.521 30.045 6.780 8,354 24% 21.5% 10.1% 02% 0.9% 0.3% 35.3% 19.8% 3.0% 5.5% 26% 22.5% 10.8% 0.3% 1.8% 0.3% 38.4% 14.7% 3.3% 4.1% 0.1% 288 2,965 80.785 (11,542) 72496 2138 296 2,648 85,107 (10,181) 77,869 2953 36.8% 53% 33.1% 33% 0.1% 1.3% 41.6% -50% 38.15 Focus English (US Virgin Islands) Total egy Total abilities and equity 79.834 $ 219,286 80,822 $ 204.522 36.3% 100.0% 30.5% 100.0% Walmart & Amazon Income Statements Jan. 31, 2019 12 Months Ended Jan. 31, 2018 Jan. 31, 2017 2019 % of Total Revenue 2018 2017 $ 510,329 4,076 514,405 $ 496,761 4582 500 343 $ 481,317 4,556 485,873 361256 385,301 107,147 21,957 373,396 106,510 20,437 101,853 22,764 74.9% 20.8% 4.3% 74.6% 21.3% 74.4% 20.9% 47% Walmart Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions Revenues: Net Sales Membership and other income Total revenues Costs and expenses: Cost of sales Operating seling, general and administrative expenses Operating income Interest: Debt 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 ne income attributable to Walmart Net Income per common share: Basic net income per common share attributable to Walmart Diluted net income per common share attributable to Walmart Weighted-average common shares outstanding Basic Diluted Dividends dedared per common share 1 1,975 371 (217) 2.129 O 8,368 11460 4281 7,179 (509) $6,670 1,978 352 (152) 2,178 3.138 0 15.123 4,600 10,523 (661) $ 9,862 2,044 323 (100) 2,267 0 0 20,497 6.204 14.293 (650) $ 13,643 0.4% 0.1% -0.04% 0.4% 0% 1.8% 22% 0.8% 14% 0.1% 13% 0.4% 0.1% -0.03% 0.4% 0.6% 0% 3.0% 0.9% 2.15 -0.1% 1.9% 04% 0.1% -0.02% 0.5% 0% 08 42% 1.3% 2.9% -0.1% 28% $ 228 $ 226 $3.29 $328 $440 $438 2,929 2,945 $ 208 2.995 3,010 $2.04 3,101 E 112 $ 2 & Focus English (U.S. Virgin Islands) 12 Months Ended Dec 31, 2018 $ 232.887 Dec 31, 2019 $ 280,522 2019 % of Net Sales 2018 2017 Dec 31, 2017 $177,886 165,536 40,232 35,931 18,878 5,203 201 265 981 14,541 Amazon Consolidated Statements of Income - USD ($) shares in Millions, $ In Millions Total net sales Operating expenses Cost of sales Fulfilment Technology and content Marketing General and administrative Other operating expense (income) net Total operating expenses Operating income Interest income Interest expense Other income (expense.net Total non-operating income (expense) Income before income taxes Provision for income taxes Equity method investment activity, net of tax Net income Basic earnings per share Diluted earnings per share Weighted average shares used in computation of earnings per share: Basic (in shares) Diluted in shares) Net product sales Total net sales Net service sales Total net sales 139,156 34,027 28,837 13,814 4,336 296 220,466 12,421 440 (1417) (183) (1,160) 11.261 (1.197) 9 $ 10,073 $20.68 $ 20.14 111.934 25,249 22620 10,069 3,674 214 173,760 4,108 202 (848) 346 (300) 3.806 (789) 58.01% 59.8% 14.3% 14.6% 12.8% 12.4% 5.9% 1.9% 1.9% 0.1% 0.1% 9488 94.7% 52% 53% 0.3% 02% -0.6% 0.6% 0.07% -0.2% 05% 5.0% 48% 0.8% -0.5% -0.0040.003% 41% 62.9% 14.2% 12.7% 57% 21% 0.1% 97.7% 23% 0.1% -0.5% 02% -0.2% 218 (1,600) 203 (565) 13,976 (2374) (14) $ 11,588 $ 23.46 $ 23.01 -0.002% 43% $3.033 $6.32 $6.15 494 504 480 493 500 $160 408 $ 141,915 $ 118,573 $ 120, 114 $ 90,972 559293 Operating Income was considerably high in 2018 and 2019 for both companies. There has been a major increase in Amazon's net income over the past three years, however, Walmart's net income has been decreasing 's Focus English (U.S. Virgin Islands) wix] 9P
