Walmart Stores Inc Financial Analysis
Its success story can be attributed to the fact that it incorporates four pillars of corporates strategy which includes attaining dominance in the retail market, expansion in the United States and international markets, the creation of positive brand and company recognition and expanding out into the new sectors of Retail. These pillars promote corporate Excellency in the Wal-Mart incorporation. The company acknowledges the impact of the political environment by setting up a political action committee that offers almost a quarter million dollars annually. The company must work hard towards implementation of the recommendation and the set goal policy. Several strategies facilitate the company to move into other sectors of the marketplace and expand into foreign countries. The corporation currently operates 900 stores in the America continent, 350 in Europe, and 440 Locations in the Asian continents (Yoffie, 2005).
In 2005, Wal-Mart achieved 260 billion dollars in sales 2005 thus making it the largest company in the world and further being the largest retail corporation in the world. Wal-Mart faces stiff competition both domestically and internationally. Wal-Mart currently has a huge competitive edge over its competitors. For instance, Wal-Mart’s sales were twice more than the sales of its two closest rivals (Home Depot 65 Billion and Target 50 billion. Financial reports provide for detailed monthly income/revenues, company‘s liabilities and equity structure. Preparing for adverse condition and better marketing condition is vital for the management of a corporation. In horizontal analysis, comparison of historical and current financial statements is essential for the element. This information is important in forecasting future market condition. in the balance sheet the net revenue for the Wal-Mart company for 2016, 2015, 2014 and 2013 in millions$482, 130, $485, 651, $476, 294, $468,651 respectively.
On the other hand, its main competitor the target corporation the operating income for 2016, 2015, 2014 and 2013 is 4, 910, $4535, $4779 and $5740 recording a 20%in 2015 in the operating income growth. Target corp total assets for 2014, 2015, and 2016 records are$ 44,553,$41,404,$40262 experiencing a dismal asset growth reduction of 28% while the Wal-Mart total assets for 2014,2015 and 2016 are$ 204,751,$203,706,$199,581 respectively. Wal-Mart interest expense Retained earnings This is achieved after deducting all dividends where higher retained earnings show that the company is consistently making a profit during their business life. If a company makes an annual loss, it is deducted from the retained value. The Wal-Mart company retained earnings increased from Jan 2015($85,777million) to Jan 2016($90021 million) but later declined to Jan 2017($89,354Million) while the retained earnings for the Target Corporation is currently at $7.
from the assessment it is clear that the company offsets their obligations mostly using their assets. It does not depict that the company is heading to bankruptcy. The Wal-Mart company has a debt/equity ratio of 0. as of 2015 and 0. This ratio assesses the financial leverage of the company which shows the amount of debt that a company uses to finance its assets as compared to the amount of shareholders equity. Inventory turnover shows the number of times a company inventory is sold and replacement of assets done over time. In Wal-Mart, it indicates that strong sales are indicating more enormous discounts and thus there is balanced inventory just enough for the company operation. Return on Equity Measures the net income accumulated on total assets for a specific period while comparing the total average assets to net income.
The Wal-Mart ROE in years 2013, 2014, 2015 and 2016 is 23. and 18. Literature review There exist some studies that are set tackle the issue about Wal-Mart’s impacts on the labor markets focusing more on the target market. Some of the work targets to address the issue of political disputes caused by the entry of Wal-Mart in the market into a particular market. On reviewing previous literature done on Wal-Mart, some literature was biased against the Wal-Mart company and favored their competitors. They were hastily prepared and were full of errors that affected and based on arbitrary assumptions and thus were not considered in this review. Most of the studies set their focus on the effects of Wal-Mart on retail business. The Multi-nation, in this case, could enter the market through providing licensing, franchising, royalties or entering into a partnership.
From previous studies, these methods of entry have demerits and merits depending on the extent of risk present, the control and amount of resources to be committed and the return on investment they offer. A study conducted in India to the effect of globalization strategy in Entry to the Indian market after its main competitor Tesco entry to the market. It faced strict government restrictions in a bid to protect its small retailers. Halapete, 2010). The following are the external economic factors. • Stability in major economies(opportunity) • Continued expansion of developing countries(opportunity) • Diminishing unemployment in the united states(opportunity) This clearly shows that the company should seize the opportunity by embracing globalization through establishing firms where there is a high demand for goods from retail firms like Wal-Mart.
Social factors It influences consumer perception and preferences. They include • Healthy lifestyle trend(opportunity) • Cultural diversity trend(opportunity) • Urban migration(opportunity) The company can, therefore, utilize this opportunity to increase the variety of healthy products to satisfy various cultural preferences Technological factors They include • Increasing business automation(opportunity) • Business analytics(opportunity) • Encouraging mobile device usage among consumers The Wal-Mart company can boost its online presence and encourage online marketing which will boost revenues. Environmental factors The company should look forward to attaining business sustainability and enhance operational efficiency in business. It can involve the local Indian community through either directly or indirectly trading through either local purchasing goods or manufacturing local goods thus providing employment and revenue to the Indian population and thus attracting more customer participation.
The Indian government plans to boost its economy through encouraging foreign investment from multinationals thus it is wise for the Wal-Mart to get permission to have a direct link with the customers. This will provide for an increase in revenue and attain its potential of the global leader in India retail market. Continuous research by the company is important in order to understand the demand for the consumer scenario which is highly dynamic. Conclusion The globalizing strategy has a massive impact on the environment, political systems, culture, success and economic progress. com/2015/06/wal-mart-wmt-dividend-stock-analysis. html. Forbes Financial (2010). Retrieved August 7, 2015, from http://finapps. forbes. Retrieved from http://www. investopedia. com/terms/p/profitabilityratios. asp. Loth, R. US Stock Market Leaders. Wal-Mart Stores Inc. WWT) Corporate Profile.
Retrieved August 7, 2015, from https://www. stock-analysis-on.
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