Analysis Of Walmart

Walmart is currently the largest retail store in the world. It holds three segments and international businesses around the world. One of the ways it has managed to stay on top of the competition is by having four times more sales than any of its competitors. In this report, I will be analyzing and reflecting on Walmart’s financial information dealing with its statement of cash flows for the fiscal year ending in January 31, 2016 from the SEC 10-K filing.

How does Walmart generate so much revenue? Per the SEC 10-K filing in January 31 of 2016, most of Walmart’s total revenue were from net sales and a small portion was from membership fees and other income. The currency exchange rate and the lower prices for fuel at the SAM’s Club segments

Even though Walmart was charged over $700 million in the closure of 150 stores and the fact that it accrues numerous operating expenses, (Walmart’s digital retail and information technology), Walmart is still on top as the most profitable competitive retail store. The fact that Walmart has all these revenues and expenses notated in the financial statement, there is one statement that will show how the cash is flowing in and out of the business. The statement of cash flows will show if the company has cash not depending on account receivables or bank financing to show that the company is profitable. In Walmart’s SEC 10-K filing for fiscal year ending in January 31, 2016, reflects the statement of cash flows for the past three years (2014, 2015, 2016) that ended January 31 of each respective year. The statement of cash flows is divided in three activities; operating, investing, and financing. In order to analyze Walmart’s statement of cash flows we need to consider all three activities individually. By looking at how Walmart generates its revenues in all three categories we can better understand how it has managed to be the leading retail store, thus making it the most profitable above all

Walmart’s operating activities showed an income from continuing operations of $15,080 billion that came from the income statement and $12,309 billion provided from operating activities in the cash flow statement. The depreciation and amortization was added back to the operating activities as the amount of $9,454 billion was subtracted in the income statement, but it was not actual cash so it comes back to the cash flow statement. The deferred income taxes of $672 billion, are taxes that Walmart has paid but it has not been reflected in the income statement. Other operating activities added $1,410 billion to the statement of cash flow. Walmart increased in receivable creating a negative $19 billion that could have come from new clients account. The account receivable turnover ratio is 77.18. The ratio is calculated by dividing net credit sales $478,614 billion by average account receivable $6,201 billion ($6,778 (2015) / $5,624 (2016)) and show that Walmart has a great established program to collect cash on credit sales. Costco is Walmart closest competitor when it comes to consumables products and their account receivable turnover ratio is 93.76 over 16.58 than Walmart’s 77.18. This show that not always the top company has the best program established to collect cash