Evaluation of Corporate Performance (Walmart Marketing) (Research Paper Sample)

Evaluation of Corporate Performance (Walmart)
Name
Institutional Affiliation
Introduction
Organizations collect all their information on their incoming revenue, spending costs and any extra expense that may have taken place. The calculation of the numbers is done using definite formulas to decide what appears on the income statements, balance sheets and identifying their cost of goods. It is therefore vital that these figures are precise as they show the organizations spending culture, profitability and are also used by investors to make their investment decisions on whether or not to buy or sell the stock. The following information is based on Wal-Mart Company.
Lenders, investors and financial managers carry out analysis of large qualities of financial data for purposes of comparison and evaluation of performance of any corporate. The process of includes compiling of large quantity of financial data into small size used for financial management (Abbamonte and Cavaliere, 2017). The analysis uses financial ratios which are inclusive of the financial records of a company. Financial statements are used to explain the financial position of organizations as at the end of a particular time for example the financial reports at the end of the year. They do not however symbolize the efficiency of the operations of the business at the end of a financial period. Abbamonte and Cavaliere (2017) assert that through use of financial ratio analysis it is possible to gauge various areas of interest such as, dividend strategy, profitability, financial strength, valuation and borrowing potential of Walmart’s stock.
In order to complete the valuation, the paper will use financial ratios to measure the corporate performance of Walmart which will be limited to the organizations financial statements for 2012-2016. The evaluations will include an overview of Walmart’s market structure, background information and industry. This paper will therefore use pro Forma Walmarts financial records such as the Pro Forma financial statements obtained from their balance sheet for the year 2017 and 2018, which assume a 10 percent growth rate in Cost of Goods Sold and Sales. The analysis of Walmart’s financial records will use financial ratios such as Economic Value Added (EVA) and Return on Equity (ROE) using the DuPont system to assess the performance management. The assessment will further review the dependability of financial policies used in Walmart ; the paper will also provide a summary of the finding’s of Walmart’s Corporate performance and conclude by giving recommendation on whether or not to buy stock from Walmart.
Walmart’s Profile
Walmart began as solitary concession store that was opened in 1962 by Sam Walton. The vision of Sam Walton was to offer great customer service and lower prices for operation and grow the business. Walmart’s business structure is today build around Walton’s vision as they offer reduced prices than their competitors and hence gives the best customers served the best shopping experience free from hassle, everyday low prices from caring associates. The store has grown to become one of the largest retail enterprises in United States with operations in 28 countries. For instance, in 1983 the company opened Sam’s Wholesale club, which is a member only based warehouse. In 1989, it acquired Cullum Companies, the following year it acquired McLane Company. From 1992, the company ventured into Mexico and expanded into Germany in 1997 and China in 1996The stores operated by Walmart include discount stores, Sam’s Club warehouses, supercenters and neighborhood markets. Walmart is the world’s largest retailer in 27 countries with over 11,110 stores, is ranked first place in Fortune 500 with a market cap of over $275 billion and (Abbamonte and Cavaliere, 2017).
Walmart is strategically positioned in the retail industry and some of their prospective competitors are Amazon, Target and Kmart. The company established itself as low price retailer. It operates E-commerce sites which help to boost sales and this positions it in the retail-online industry. Walmart has improved on its mobile and digital shopping experience with personalized searches for products for their customers. It also continues to offer free in, curb service pick up, store pick up and more products on line and it even transports them to the addresses provided by the customers thereby giving their clients a variety of choices. Furthermore, Walmart is a global retail industry with its headquarters in Bentoville, Arkansa. Its current CEO is Doughlas McMillon and its revenue is $484,604 million with a profitability of over #131.69 Billion. The company has employed more than 2.3 million associates and more than 200,000 associates given higher pay rates and more responsibilities.
Walmart’s main rivals include Costco wholesale, Sear Holdings Corporation, Kohl’s Corporation, Dollar Tree, Dollar General Corporation, Amazon and Target. Its Net Income is $ 14, 460, 000,000 and a market cap is 217,827,707,200. It has a market stock dividend of $ 1.99 and a dividend yield of 2.80. It has a growing number of shareholders estimated at 243,327 as at March 28, 2016. It uses an oligopolistic market structure because of the way it takes over a market once it ventures into it and its mass size. Once the company enters a certain market it causes several retailers to leave as they are not able to compete with the organization’s low price strategy. This has hence caused the retailer to suffer from criticism by other retailers within the industry.
Walmart’s Financial Statements
The financial statements used in Walmart include income statements, cash flow statements, shareholders equity statements and the balance sheet. Financial reports used to evaluate and measure performance of a company is the cash flow chart, balance sheet and the income statement.
Key Financials
(In USD as of 10/31/2016) 
Income Statement

Revenue

484,604m

Net Income

14,460m

EPS from Continuing Operations

4.61

EPS - Net Income – Diluted

4.61

Revenue per Share

156.88

Balance Sheet

Total Assets

206,857m

Total Liabilities

129,164m

Shareholders' Equity

77,693m

Total Assets per Share

67.18

Net Assets per Share

25.23

Cash Flows

Cash from Operations

32,028m

Cash from Investing

-14,158m

Cash from Financing

-17,998m

Capital Expenditures

10,713m

Cash Flow per Share

10.3







Walmart’s Income Statement for 2013-2016 (Million)
20122013 2014 2015 2016
Revenue 446,950 469,114473,076 482,229 478,614
Net Income 15,698 16,979 16,012 16,383 14,594
EPS from Continuing Operations 4.48 6.04 4.80 5.07 4.58
EPS – Net Income – Diluted 4.45 6.02 4.78 5.05 4.57
Revenue per Share 159.99 169.99 160.22 163.63 146.94
Walmart’s balance sheet for 2013-2016 (million)
2012 2013 2014 2015 2016
Total Assets 194,410 203,105 204,752 203,706 199,581
Total Liabilities 11724 153,309 155,189 151,801 143,609
Shareholders’ Equity 71,315 73,155 76,255 81,394 80,394
Total Assets per Share 71.22 74.77 76.10 80.71 68.80
Net Assets per Share 23.00 23.19 23.61 25.23 25.62
Walmart’s Cash Flows for 2013-2016
2012 2013 2014 2015 2016
Cash from Operations 24,255 25,591 23,257 28,564 27,389
Cash from Investing 16,609 12,611 12,298 11,125 10,675
Capital from Financing 8,468 11,982 11,027 15,072 16,102
Capital Expenditures (13,511) (12,798) (13,105) (12,164) (11,377)
Cash Flow per Share 8.2 9.4 10.6 10.7 10.5
From the financial report there has been an increase in Walmart’s profitability yearly until 2015 when the management noticed a decline in customer service department. This was attributed to poor trained of associates that resulted to poor labor, negative reputation and unsatisfied customers. The management therefore laid out a plan to increase the wages of employees in order to attract talented associates who could later be trained to fit in the managerial positions and hence focus on improving work reputation and on customer satisfaction. Over the years this has led to proper training of employees as there have been programs implemented that ensures this takes. The company also decided to reduce its prices in addition to maintain their reputation and customer satisfaction to remain sustainable in future (Byrd, Hickman and McPherson, 2013).
Walmart’s Pro Forma Financial Statements
The financial management team forecasts the Pro Forma financial statements using historical financial data. The assumptions are done for the next two years looks at the effect it has on the different financing options. The company’s Pro Forma income statement and balance sheet forecasts a 10 percent growth in cost of goods sold and sales for year 2018 and...