Walmart inc. Financial Analysis Statement

Requirements:

1. Obtain the electronic copies of the 10-K for the assigned company.

a. Method 1: Go to the companys website and look for the Investors page.

Note: You can also typically find Excel versions of the financials here as well. This may be useful for the quantitative analysis, later.

b. Method 2: Go to the SECs database, EDGAR, and search for your company (www.sec.gov).

2. Compile the report.

a. Background: Prepare a two to three paragraph introduction that explains your companys background, where they are at in the industry (for example, oldest, largest, 10th largest, regions served, target audience, etc.), what they do, their industry, and their primary competitors.

b. Business Risks: Describe their primary risk factors. This list can be pages long. Please limit to the two or three that you think are the largest risks that the company faces under typical operating conditions. Be sure to include your reason for selecting these as primary risk factors.

c. COVID-19 Business Risk Threats: Identify and assess the impacts of COVID-19 on your assigned companys business operations. I encourage you to brainstorm about the impacts and also to conduct searches on the Internet and to access the companys website to find discussions about how COVID-19 is impacting the companys current operations.

d. Balance Sheet:

i. What is the companys largest asset? Liability? Based on their operations and industry, is this expected, or is it surprising? Why?

ii. What method of inventory costing do they use? (This is a footnote disclosure. The footnotes appear after the consolidated financial statements, if you are looking through a 10-K document.)

e. Income Statement:

i. When does your company record revenue? If they have multiple revenue streams, you only need to answer this question for their primary revenue stream. (This is a footnote disclosure.)

f. Statement of Cash Flows:

i. Identify the two largest items in investing activities. Do you agree with their use of cash?

ii. Repeat for financing activities.

iii. Review the cash flow statement subtotals for the four sections. Comment on how well or poorly the company is managing cash flows.

g. Stock:

i. Using Yahoo Finance or a similar site, review the companys stock performance over the past five years or the life of the company. Comment on the performance and any trends that you observe.

ii. Using Yahoo Finance or a similar site, review the companys stock performance since March 1, 2020. Comment on the performance and any trends that you observe.

h. Non-financial Considerations: Through your companys website, reading news articles, and the 10-K, identify two NON-FINANCIAL items for your company that might impact the decision of an investor. These items should not be directly about revenues, expenses, etc. I am looking for items that do not show up in the financials immediately such as planned mergers, acquisitions, expansions, community involvement, awards, lawsuits, store closings, market trends etc. Be sure to discuss why these items are important to investors.

i. Financial Ratios: Calculate each of the following ratios for your assigned company for the current year and the prior year. Note: You will have to look at prior year 10-Ks to calculate some of your prior year ratios. Be sure to show your math for each.

1. Current ratio

2. Acid test ratio

3. Two profitability ratio(s) of your choice

a. Why did you choose the ratio(s) that you did?

b. Were there other profitability ratios that you considered?

4. Debt-to-Equity ratio

5. Times interest earned ratio

6. Inventory Turnover ratio

7. Comment on the ratios above.

a. Discuss each of the above ratios and the trends that you are seeing.

b. Comment on whether the change (or lack of change) is good or bad and why.

8. Important Reminder: Please be sure that you have calculated each of the above ratios for both the current and the prior year. If you have not done so, you will lose half of the points for each ratio that you do not do this for.

j. COVID-19 Accounting Risks: Please identify 2 or 3 areas of the financial statements that you think are at greatest risk of being misstated due to COVID-19. I encourage you to utilize the resources that I have provided below to help address this question. Think about which of these risks are most relevant to your specific company. If you think many of them are extremely relevant, please pick 2-3 to focus on. Explain how the financial statements could be impacted by these risks. For instance, if it is likely that a certain asset would be misstated in a particular direction (e.g., overstated), please specify that in your discussion.

k. Overall analysis: Using the entire analysis thus far, do you think that this company is worth investing in? Please answer this question under both normal conditions and under our current COVID-19 conditions. What were the two or three key factors that influenced your decision?