Walmart has issued lots of bonds. Other reports showed the same pattern. For example, I noticed that on February 15, 2000, Walmart issued $1 billion in bonds with a coupon rate of 7.55 per cent. The bonds mature on February 15, 2030, around 11 years from now. I also noticed from an online source that these bonds were selling for $136.38 and yielding 3.53 per cent. U.S. Department of Treasury website that three-month treasury bills were yielding 2.45 per cent, while one-, five-, and 10-year treasury bonds were yielding 2.54 per cent, 2.47 per cent, and 2.65 per cent, respectively I found some other interest rates as well. The prime rate is 5.50 per cent, and three-month commercial paper was averaging 2.73 per cent of dividends that shareholders receive, we could examine the an... Edit question shareholder return is in the form of dividends that shareholders receive, we could examine the annual dividends relative to the current stock price. Over the past year, shareholders received $2.08 per share in dividends. The stock was recently trading for $102.20. Walmart recorded $2.26 in unadjusted earnings per share, but $4.91 in adjusted earnings per share. I estimated Walmart's return on equity or ROE to be 8.9 per cent as of the fiscal year ending January 31, 2019. For 2018, 2017, and 2016, it was 12.7, 17.2, and 18.1 per cent, respectively. Walmart's recent "raw" beta was 0.56. It was based on a regression of two years of weekly data. I noticed that as well. There was also an "adjusted" beta of 0.71. According to Bloomberg, the ad hoc adjustment0.67 times the raw beta plus 0.33always makes the adjusted beta closer to the market's beta of 1.0. A new tax rate is 21 per cent but a recent press release to accompany Walmart's quarterly returns says the company is anticipating an effective tax rate of around 27 per cent.
What is walmart weighted average cost of capital 
Page 6 9819N011 EXHIBIT 2: WALMART INC., CONSOLIDATED BALANCE SHEET AS OF JANUARY 31 (8 MILLIONS) 2018 ASSETS Current ASOS Cash and Equivalents Accounts Recheblo Invorvery Prepaid Expenses To Current Net Properly, Planiment Gewil Other Long-Term Iosets Total Assets 47.000 22,150 5,225 2.805 77,477 70,52 LANLMES r: Lisl:ifika. Account Payable Accrued Liabilities Short-Tarm Bomwings Current Point Long Term & Captal Lease Other Current Lisboss Total CurrentLabsites Long-Term Detta Cape Doterodromo Taies and other Total Liabilities EQUITY Como us ant Pas Cell Res Earring Oh Cam Income Las) Total Comme Equity Non Controlling interest Total Equity opy 50.213 25 11,081 8,354 139.661 123.700 3.253 2,4 80,75 A5, 107 (11 5423110141 72,488 77,869 7,138 2,953 TOMAA22 Total Liabilities & Equity 212 25.7.622 Nrw That Warped a lot of carbon ex of the WTO 1,845 a cu Source Care by the use oubor on Wumal 16, 2039 Ascu' Raporu 7, Avi 30, 2019 ES:52.gcdn.co.066622843edoc tronco 209an 2019-NR Find The cry Depygarpating: Page 7 98-19N011 EXHIBIT 3: WALMART INC., CONSOLIDATED INCOME STATEMENT AS OF JANUARY 31 (S MILLIONS! Revenus Cesta aid Expenses Cost of Goods Cpalaire, Saling, Banana &Aaminarala Ewansas Total Costs and contes Opening 2019 2018 51486 on 243 ano 373.196 102.147108,510 293.4.10 470106 21,957 20437 biri Net Other sem Belorum 12,1291 18.3681 11,460 12,1761 13.33 15,123 INSERIER 1.211 40 Net Income 7.179 10.623 Nutnom slo Non-Contage 161) Net Income is buiablo to Walmart Shorloors REZ 63720 9262 New This WTW whore Sou've created by the use our ing dalon Wawal... 2019 Acual Report 7. cessed Api 30, 2019. :52.con.com.620 de Iron Man 2019-AR Fina pot 8 Nov EXHIBIT 4: SELECTED DATA ON WALMART INC. 2007-2018 Stock Total EPS DPS Price Falun 271 0.47 260 +0.07% 3.12 0.89 7,04% 3.99 0.96 38.36 3.62% 311 43.04 9.00 1 1.21 42.33 1.15% 4.52 1.46 49.45 20.329 su2 1.39 60.66 25.97% 4 RA HAA 66.64 424 SOR 1. 73.58 n. 10 456 81.39 -16.17% 420 2.00 67.64 12 327 2.04 87.96 3.00 90.00 NA .ac you, Jay S1.EP3 camere DPB-nidura pe che, To Run-Deed Frice Charge : Pievious Price Su Cred by the horring a wided and ck po data om Waimann ANTI" Yahoo Firona February 20, 209, p... WIVE curtas e matere D. ITTI 2.2 For Jan. 21.209." Y Ches, scossed February 23, 2019. lpsychots.com corporis Wee_un Lee: woww..wo nociced from line bese bones Song S116 Dale: I think the reason we really care about the cost of capital is because we want to what burde rate Walmart should use for its annual investments in capital projects, which represent wibres of Lee: But I'm not sure if it should make any difference to senior managemene whether be company is investing in we U.S.stores, cemedelling, or investing international Sdn't likey want the Dele. Interesting question. So, whese lauld we art! I was thinking we might bank at the balance sheo-articularly the lisilities and equity. Shulalo't dal show how Walnut financed is assets, which cost over $200 billion? I.ce: Yes, and I think we will try to assie aan with each of the itens. Then we meal to figure Or how to average them in order to estimate the cost of capital Dale Turk we als kind interest rate at bermwing male, schalthes. O maybe we can just take a look at how much interest the company paid last year relative to its alebt? That might There sure are a lot of interest rates. I porced on the US Department of Treasury website thar le-txilleraty bills were yielding 245 kcal, while live and 10-year latery Imals we yielling 2.54 km, 2.07 ell, a 245 et al, pectively illal together these and some oder mutes to each cay's yield curve compared with last year's (see Exhibit). 1 w if I .. ........The Dale: I found some other interest rates as weil. The prime race is 3.50 per cent, and three month mercial up was averaging 2.7 persen. I real in the meal plan Walmart Shoes il commercial print if ils le mwing that information might be relevant. I also read that Walmart uses short term boctowing to provide fums Tastatically, theke sixpwmilun, sal weer schauen, Lee: Yes, wd I read the same report that Walmart has issued loss of boards. Other reports sowed the jalan. Fenpleinste Fuenary 15, 2000 Walmari si in als will come tale of 7.55 Tul. Thermal con Furry 15 2010, 11 smilgreiding 35 per cute think I was to realiskuuta www.al with them all the life in pomenil yolk relewat foc Us! Del: What are preferral slams? 1km'think Walset has a mily, talaga issued some kind of securities that were like preferred shares. I don't think the company has any plans to isson mw preferral as in the word while at may we should be pas figure new it will lead them of capital if it til Low could go ahe estimating the cost of uity 378 US Dol Twm Car Dwyryd Gunn RSS Entry 19 ans, www.TITY PATRO-chet-card-tested please 01517333600 Page 3 96-9N011 Dale: I think, since shareholder retum is in the form of a deads that starcbalders receive, we could ani wa chama the current suck price. Owerlast year walk received Sp. per share in dividends. The stock was recently trading to $100.20 I I thinking te mu rudeant than livickx Faming we will several one-time write- ots at the end of the last fiscal year. Walmart recorded S2.26 in unadjused cummings per stare but $4.91 adjusted canines per share. So why not take the ranings in die bo ile sick ? Dale: I wonder if we can estimate an equity return using accounting information such as the book value uf Teslimat Wilroet's lur cept ROE per carnis of the fiscal year Ending January 31, 2019. For 2018, 2017, and 2016, it was 92.7. 17.2, and 18.1 per cent, respectively Lee: Bu that cludes retained great those like free cup and there something we can iptare! Dale. Maybe we're overlooking something, there may be a different approach Recall that we read about the bem stock. It is usually estimated by regresstag the return on a stock, like Walmar, gainst the ten on the market. like the S&P 500 According to the Blauberg terminal ceed in our teary, Walmart's reales 11:36. It was based on a regression of Iwo years of weekly data L.ce. Liticed that is well. There was also madljused betaal 0.71. According to Hlcomberg, the ad hoc adjustment-067 times De betalus 0.33lways makes the adjusted bell closer to the market's beix of 10 They do this berate of the assumption that security's beta tends to move tnwand the mudel viage avertin Dule: Well, I think if try to incorporats Walmart's beta then wp need to show take into account Loe: We also need to incorporate taxes. Im not sure here we go about doing that. But I also soticed in the business will completar ndes we want is the real che la valle w US las regulation. I read that the new rue 21 per cent Bula el press release accampany Walexts quarterly retiens says the company is anticipating an effective tax rate of 2 Dale: Wharto decorred income taxes? I remember reading that these can arise when a companys kwallacciale ils exexola exter rate. It tax pis del mic depreciation is that money that needs to be paid back to the tax depurunean? If so, what cost is 25said with it! I'm In max there are millions del marcilities and Equity," and I'm not even wre wear they mean, Tali. 1 y lue ligured them ail: luz Nunen il-Which te lul ill wih "Deterred Income Taxes and is probably about half the total may bave to do wid some maliza lases bilging instrumen De Campucheative Law" was ribellus lacin exchange losses, with the U.S. dollstroeger release to other currentes. And "Noa Controlling Page 6 9819N011 EXHIBIT 2: WALMART INC., CONSOLIDATED BALANCE SHEET AS OF JANUARY 31 (8 MILLIONS) 2018 ASSETS Current ASOS Cash and Equivalents Accounts Recheblo Invorvery Prepaid Expenses To Current Net Properly, Planiment Gewil Other Long-Term Iosets Total Assets 47.000 22,150 5,225 2.805 77,477 70,52 LANLMES r: Lisl:ifika. Account Payable Accrued Liabilities Short-Tarm Bomwings Current Point Long Term & Captal Lease Other Current Lisboss Total CurrentLabsites Long-Term Detta Cape Doterodromo Taies and other Total Liabilities EQUITY Como us ant Pas Cell Res Earring Oh Cam Income Las) Total Comme Equity Non Controlling interest Total Equity opy 50.213 25 11,081 8,354 139.661 123.700 3.253 2,4 80,75 A5, 107 (11 5423110141 72,488 77,869 7,138 2,953 TOMAA22 Total Liabilities & Equity 212 25.7.622 Nrw That Warped a lot of carbon ex of the WTO 1,845 a cu Source Care by the use oubor on Wumal 16, 2039 Ascu' Raporu 7, Avi 30, 2019 ES:52.gcdn.co.066622843edoc tronco 209an 2019-NR Find The cry Depygarpating: Page 7 98-19N011 EXHIBIT 3: WALMART INC., CONSOLIDATED INCOME STATEMENT AS OF JANUARY 31 (S MILLIONS! Revenus Cesta aid Expenses Cost of Goods Cpalaire, Saling, Banana &Aaminarala Ewansas Total Costs and contes Opening 2019 2018 51486 on 243 ano 373.196 102.147108,510 293.4.10 470106 21,957 20437 biri Net Other sem Belorum 12,1291 18.3681 11,460 12,1761 13.33 15,123 INSERIER 1.211 40 Net Income 7.179 10.623 Nutnom slo Non-Contage 161) Net Income is buiablo to Walmart Shorloors REZ 63720 9262 New This WTW whore Sou've created by the use our ing dalon Wawal... 2019 Acual Report 7. cessed Api 30, 2019. :52.con.com.620 de Iron Man 2019-AR Fina pot 8 Nov EXHIBIT 4: SELECTED DATA ON WALMART INC. 2007-2018 Stock Total EPS DPS Price Falun 271 0.47 260 +0.07% 3.12 0.89 7,04% 3.99 0.96 38.36 3.62% 311 43.04 9.00 1 1.21 42.33 1.15% 4.52 1.46 49.45 20.329 su2 1.39 60.66 25.97% 4 RA HAA 66.64 424 SOR 1. 73.58 n. 10 456 81.39 -16.17% 420 2.00 67.64 12 327 2.04 87.96 3.00 90.00 NA .ac you, Jay S1.EP3 camere DPB-nidura pe che, To Run-Deed Frice Charge : Pievious Price Su Cred by the horring a wided and ck po data om Waimann ANTI" Yahoo Firona February 20, 209, p... WIVE curtas e matere D. ITTI 2.2 For Jan. 21.209." Y Ches, scossed February 23, 2019. lpsychots.com corporis Wee_un Lee: woww..wo nociced from line bese bones Song S116 Dale: I think the reason we really care about the cost of capital is because we want to what burde rate Walmart should use for its annual investments in capital projects, which represent wibres of Lee: But I'm not sure if it should make any difference to senior managemene whether be company is investing in we U.S.stores, cemedelling, or investing international Sdn't likey want the Dele. Interesting question. So, whese lauld we art! I was thinking we might bank at the balance sheo-articularly the lisilities and equity. Shulalo't dal show how Walnut financed is assets, which cost over $200 billion? I.ce: Yes, and I think we will try to assie aan with each of the itens. Then we meal to figure Or how to average them in order to estimate the cost of capital Dale Turk we als kind interest rate at bermwing male, schalthes. O maybe we can just take a look at how much interest the company paid last year relative to its alebt? That might There sure are a lot of interest rates. I porced on the US Department of Treasury website thar le-txilleraty bills were yielding 245 kcal, while live and 10-year latery Imals we yielling 2.54 km, 2.07 ell, a 245 et al, pectively illal together these and some oder mutes to each cay's yield curve compared with last year's (see Exhibit). 1 w if I .. ........The Dale: I found some other interest rates as weil. The prime race is 3.50 per cent, and three month mercial up was averaging 2.7 persen. I real in the meal plan Walmart Shoes il commercial print if ils le mwing that information might be relevant. I also read that Walmart uses short term boctowing to provide fums Tastatically, theke sixpwmilun, sal weer schauen, Lee: Yes, wd I read the same report that Walmart has issued loss of boards. Other reports sowed the jalan. Fenpleinste Fuenary 15, 2000 Walmari si in als will come tale of 7.55 Tul. Thermal con Furry 15 2010, 11 smilgreiding 35 per cute think I was to realiskuuta www.al with them all the life in pomenil yolk relewat foc Us! Del: What are preferral slams? 1km'think Walset has a mily, talaga issued some kind of securities that were like preferred shares. I don't think the company has any plans to isson mw preferral as in the word while at may we should be pas figure new it will lead them of capital if it til Low could go ahe estimating the cost of uity 378 US Dol Twm Car Dwyryd Gunn RSS Entry 19 ans, www.TITY PATRO-chet-card-tested please 01517333600 Page 3 96-9N011 Dale: I think, since shareholder retum is in the form of a deads that starcbalders receive, we could ani wa chama the current suck price. Owerlast year walk received Sp. per share in dividends. The stock was recently trading to $100.20 I I thinking te mu rudeant than livickx Faming we will several one-time write- ots at the end of the last fiscal year. Walmart recorded S2.26 in unadjused cummings per stare but $4.91 adjusted canines per share. So why not take the ranings in die bo ile sick ? Dale: I wonder if we can estimate an equity return using accounting information such as the book value uf Teslimat Wilroet's lur cept ROE per carnis of the fiscal year Ending January 31, 2019. For 2018, 2017, and 2016, it was 92.7. 17.2, and 18.1 per cent, respectively Lee: Bu that cludes retained great those like free cup and there something we can iptare! Dale. Maybe we're overlooking something, there may be a different approach Recall that we read about the bem stock. It is usually estimated by regresstag the return on a stock, like Walmar, gainst the ten on the market. like the S&P 500 According to the Blauberg terminal ceed in our teary, Walmart's reales 11:36. It was based on a regression of Iwo years of weekly data L.ce. Liticed that is well. There was also madljused betaal 0.71. According to Hlcomberg, the ad hoc adjustment-067 times De betalus 0.33lways makes the adjusted bell closer to the market's beix of 10 They do this berate of the assumption that security's beta tends to move tnwand the mudel viage avertin Dule: Well, I think if try to incorporats Walmart's beta then wp need to show take into account Loe: We also need to incorporate taxes. Im not sure here we go about doing that. But I also soticed in the business will completar ndes we want is the real che la valle w US las regulation. I read that the new rue 21 per cent Bula el press release accampany Walexts quarterly retiens says the company is anticipating an effective tax rate of 2 Dale: Wharto decorred income taxes? I remember reading that these can arise when a companys kwallacciale ils exexola exter rate. It tax pis del mic depreciation is that money that needs to be paid back to the tax depurunean? If so, what cost is 25said with it! I'm In max there are millions del marcilities and Equity," and I'm not even wre wear they mean, Tali. 1 y lue ligured them ail: luz Nunen il-Which te lul ill wih "Deterred Income Taxes and is probably about half the total may bave to do wid some maliza lases bilging instrumen De Campucheative Law" was ribellus lacin exchange losses, with the U.S. dollstroeger release to other currentes. And "Noa Controlling
