Sign In
Not register? Register Now!
Essay Available:
Pages:
9 pages/≈2475 words
Sources:
6 Sources
Level:
APA
Subject:
Business & Marketing
Type:
Research Proposal
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 43.74
Topic:

Marketing Research Proposal: Walmart Stores Incorporated (Research Proposal Sample)

Instructions:

A FINANCIAL ANALYSIS OF WALMART STORES INCORPORATED.

source..
Content:

ACCOUNTING
Student’s Name
Institution
Introduction
Walmart Stores Incorporated is an American retail corporation. The corporation owns grocery stores, hypermarkets, and discount department stores. It operates as a multinational corporation with business in about thirty countries around the world. This paper will analyze the financial statements of the corporation based on the annual reports of the year 2014, 2015 and 2016. The basis of deferred tax assets and liabilities will be analyzed. The financial analysis will also look at the tax provisions in the most recent years. The policy framework used in the tax provision together with the financial factors will be looked at in this financial analysis.
The Amount of Deferred Tax Assets or Deferred Tax Liabilities on the Balance Sheet 2014-2016
As of the year ended 2016 in its balance sheet, Walmart had US$7.321 billion in deferred income tax. This was a reduction from the previous year, 2015 of US$8.805 billion. Walmart used the balance sheet method in the presentation of all its income taxes. In its consolidated statement of income, the company made current provision for income tax of US$7.584 billion. The deferred provision in the same period amounted to US$1.026 billion. For the previous year ended 2015, the current provision for income tax amounted to US$8.504 billion and US$519 in the deferred provision for deferred income tax. Similarly for the year ended 2014 the provisions for deferred income tax were US$8.619 billion and US$514 million for current and deferred respectively (Annual report, 2015).
The deferred tax asset and liabilities arise from the taxable temporary difference. The taxable temporary difference is the difference between the carrying amounts of the assets and liabilities and their tax base. This amount also relates to the period the revenue and expenses were recognized in the book value and the tax return. It reflects the future tax implication of the same. Deferred tax asset is a prepaid tax expense. Any overpayment in tax expenses is refundable to the company. A deferred tax liability is the payable future tax expense based on the current transactions. This liability arises from the taxable temporary differences.
The Temporary and Permanent Differences Disclosed By the Company in the Footnotes
Temporary differences arise when expenses and revenues are recognized at different accounting period in the book and tax returns. Temporary differences are applicable in tax assessment. It is the deferred tax liability or asset which will arise in the future (Fabozzi & Peterson, 1999, p.25). This is the difference between the tax estimates obtained based on the carrying amount of the asset or the liability and the tax base used by the authorities to calculate the tax liability of the company. The company measures the deferred tax assets and liabilities using the prevailing tax rates related to the relevant year. Recent cumulative earning and carry forward periods are some of the aspects in ascertaining the accuracy of the estimates.
The permanent difference occurs when the revenue and expenses recognized in the books of account cannot be adjusted in the tax returns. Depreciation of company assets can bring about temporary differences. Accounting for prepaid expense give rise to the temporary difference. Examples of permanent differences include fines and tax penalties. These expenses are not deducted in the tax expenses. Insurance premiums paid by the company cannot be adjusted in the tax return and therefore are the example of permanent difference as well. For the three years 2016, 2015 and 2014 under analysis, Walmart Stores Incorporated did not have any entries for the permanent difference in its financial statements.
The Amount of Income Tax Provisions in the Two Most Recent Years on the Income Statement
In its consolidated statement of income, Walmart had US$7.584 billion as the current provision for income taxes for the year ended 2016. The deferred provision for income tax in the same year was US$1.026 billion. The total provision for income tax in the same year, therefore, was US$6.558 billion. As of the year ended 2015, the company had US$8.504 billion in the current provision for income tax and US$519 million in the deferred provisions for income taxes. The net provision for income taxes in the same year was US$7.985 billion. For the year ended 2014, the current provision for income taxes amounted to US$8.619 billion and US$514 billion in the deferred provisions for income taxes. The net provision for the same year was US$8.105 billion.
The balance sheet method is used in accounting for income tax at Walmart. The method recognizes deferred tax assets and liabilities. This is done to assess the impact of the expenses of the company. The deferred tax liabilities in the books of the company have been estimated using the tax rates related to the relevant financial year. A valuation allowance is used in the evaluation to ascertain the accuracy of the deferred tax assets and liabilities. Forecasted operating earnings, the reversal of taxable temporary differences and other tax planning strategies are used by the company in the assessment of deferred tax assets and the deferred tax liabilities.
The provisions for tax income uses effective income tax rate. This rate is based on the annual income. Another basis for the same is the tax regulators’ rates and the permanent difference in financial statements and the tax returns. Any policy change is accounted for in the application of this policy framework (Dunn & Rogers, 2008, p.63). Walmart Stores Incorporated did not have a net operating loss carry-forwards or carry-backs in its financial statements. The elements of net operating loss carry forwards and the net operating loss carry-backs are usually reflected in the consolidated income statements. The difference in this expense relates to the accounting periods used.
As To Whether the Company Has a Defined Benefit or Defined Contribution Plan
Walmart runs a defined contribution plan as well as a defined benefit plan. Under the plan, the employees who are also referred to as associates can start contributing to the defined contribution plan immediately after they are hired in the workforce of the company. The 401(k) plan offered by the company to its employees in the US is exercisable immediately after recruitment. There is also another plan offered in the Puerto Rico operations of the company. Under this 401(k) plan, the employees can start contributing after a year of employment. The defined benefit plan related to the year ended 2016 in the international operations amounted to US$6 million (Annual report, 2016).
For both plans, matching of 100% of employee contribution to 6% annual earning is done. Both plans allow the employee to contribute up to 50% of their earning before tax. The plan, however, does not allow contribution beyond the statutory provided limits. The company also has plans which cover employees in the markets outside the US. These plans are run based on the regulatory and tax framework in the relevant country. For the year ended 2016, the expense for the defined contribution plan in the US amounted to US$967 million. The expense for the same plan in the international market amounted to US$179 million (Annual report, 2016).
The Earnings per Share Amounts Disclosed On the Income Statement for the Most Recent Year
In the income statement of the company, the basic income per common share from continuing operations attributable to Walmart for the year ended 2016 US$4.58. This was a decrease as compared to that of the previous year which was US$5.01. Similarly, in the year ended 2014, the basic income per common share from continuing operations amounted to US$4.87. There was no basic income per common share from discontinued operations attributable to Walmart for the year ended 2016. In 2015 and 2014 it was US$0.006 and 0.03 respectively. The dilutive securities were the stock options and share awards. These dilutive securities have an overall effect of reducing the earning per share.
The diluted income per common share from continuing operations attributable to Walmart for the year ended 2016 was US$4.57 and the same for the year 2015 was US$4.99. In the year 2014, the diluted income per share was US$4.85. For the discontinued operations, the diluted income per common share attributable to Walmart US$0.06 in 2016 and US$0.03 respectively. There was no diluted income per common share in discontinued operations for the year 2016. The dilutive securities include stock options and share awards as disclosed in the notes of the company. The effect of the dilutive securities, the stock options, and share awards has the effect of reducing the earning per share for the relevant financial year.
Dilutive securities by definition are securities apart from common stock. These securities have an effect on the common stock when exercised by the holder. The effect of dilutive securities is that it reduces the earning per share of common stock in a particular financial year. Examples of these securities include stock options, convertible preferred stocks, convertible debentures and share awards. Stock options offer give the employee of the company the right price to purchase the shares of common stock at a fixed price. They are to gain from exercising it when the price has risen. It is an incentive meant to align the interests of the employees with that of the shareholders which is wealth maximization.
The Kind Of Share-Based Compensation in the Company
Walmart Stores Incorporated has a share based compensation for its employees and the non-executive members of its board. For the year 2016, the corporation spent US$448 million in the plan. Similarly for the two years 2015 and 2014, Walmart spent US$462 million and US$388 million respectively in their share ba...
Get the Whole Paper!
Not exactly what you need?
Do you need a custom essay? Order right now:

Other Topics:

  • ABC Company Limited Funding Proposal
    Description: I am pleased to submit this proposal from the ABC Company Limited, requesting a funding investment of Ksh. 8,000,000 to help start publishing of a water project...
    1 page/≈275 words| No Sources | APA | Business & Marketing | Research Proposal |
  • Gap Analysis
    Description: Davis Forestry Company is a service disabled veteran company ...
    2 pages/≈550 words| 2 Sources | APA | Business & Marketing | Research Proposal |
  • Measuring the Effectiveness of Customer Service Satisfaction
    Description: Satisfying customers is a business philosophy which entails the creation and addition of value to customers, managing and anticipating their expectations...
    10 pages/≈2750 words| 15 Sources | APA | Business & Marketing | Research Proposal |
Need a Custom Essay Written?
First time 15% Discount!