Financial Accounting for Financial Decisions
Financial Analysis of the Company ‘’Walmart’’
Tekla Apkhadze
Luka Zakarashvili
Marek Thiel
Professor: David Kobuladze
28.11.2021
1. Company Overview (as of 31/01/2021)
Walmart is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores and grocery
stores. The company was founded by Sam Walton in 1962 and since then operates in retail industry. As of now Walmart has 10,556
stores in 24 countries.
Walmart operates in four divisions: Walmart U.S., Walmart International, Sam’s Club and Global eCommerce. Walmart U.S. is the
company's largest division, accounting for roughly 65% of sales. It consists of Supercenters, Discount Stores, Neighbourhood Markets,
and other small formats. Walmart’s international operations comprise 5,224 stores and 800,000 workers in 23 countries outside the
United States. Walmart's international division accounts for roughly 23% of company’s total sales.
Sam's Club is a chain of warehouse clubs that sell groceries and general merchandise mainly in bulk. Sam’s Club operated 600
membership warehouses and accounts for 11% of Walmart’s total sales.
Walmart is the world’s 29th largest public corporation and the world’s largest company by revenue of US$559 billion. The Company
has a steady growth rate and a 2.8%, 1.7% and 6.8% increase in revenues in 2019, 2020 and 2021 respectively. In terms of Covid the
statement could be made that Covid had a positive effect on Walmart, as their revenues and net income growth rate increased in 2020
and so did the company’s stock price, increasing from US$108 in 2020 to US$129 in 2021.
2. Financial Analysis
2.1 Income Statement Analysis
Sales
Income Statement Summary 31/01/2021 31/01/2020
Sales 559,151 523,964 $600,000 4.00%
Gross profit 138,836 129,359 $550,000
2.00%
EBITDA 32,548 30,568 $500,000
Net Profit 13,510 14,881 0.00%
$450,000
$400,000 -2.00%
Profitability 31/01/2021 31/01/2020 2020 2019 2018 2017 2016
Gross Margin 24.8% 24.7% Total revenues
EBITDA Margin 5.8% 5.8%
Percentage change in total revenues from previous
Net Profit Margin 2.7% 2.8% fiscal year
Sales - Walmart U.S. comparable sales increased 8.7% and 2.9% in fiscal 2021 and 2020, respectively, driven by ticket and transactions
growth. Walmart U.S. eCommerce sales positively contributed by approximately 1.7% and 1.3% to comparable sales for the fiscal years
of 2020 and 2019. Sam's Club comparable sales increased 8.7% and 1.6% in fiscal 2020 and 2019, respectively. Sam's Club comparable
sales for both fiscal 2020 and 2019 benefited from growth in transactions and higher fuel sales, which were partially offset by lower
ticket due to decision to remove tobacco from certain club locations because of Covid-19.
Expenses - For fiscal 2021, operating expenses as a percentage of net sales decreased 8 basis points, when compared to the same period
in the previous fiscal year. These improvements were partially offset by $0.9 billion in business restructuring charges consisting
primarily of non-cash impairment charges for certain trade names, acquired developed technology, and other business restructuring
charges due to strategic decisions that resulted in the write down of certain assets in the Walmart U.S. and Walmart International
segments.
To summarize the factors discussed above, the company reported $13.5 billion and $14.8 billion of consolidated net income for the
fiscal years of 2021 and 2020, respectively, which represents an decrease of $1.0 billion and a increase of $8 billion for fiscal 2021 and
2020, respectively, when compared to the previous fiscal year. The diluted net income per common share attributable to Walmart ("EPS")
was $4.8 and $5.19 for fiscal 2021 and 2020 respectively.
2.2 Balance Sheet Analysis
Balance Sheet Summary 31/01/2021 31/01/2020
Current Assets 90,067 61,806
Total Assets 252,496 236,495
Current Liabilities 92,645 77,790
Total Liabilities 164,965 154,943
Total Equity 80,925 74,669
Liquidity 31/01/2021 31/01/2020
Current Ratio 0.55 0.40
Quick Ratio 0.27 0.25
Net Working Capital (2,578) (15,984)
Efficiency Ratios 31/01/2021 31/01/2020
Asset turnover ratio 2.29 2.30
Inventory turnover ratio 9.40 8.90
Receivables turnover ratio 87.37 83.39
DSO 4.18 4.38
DIO 38.81 41.02
DPO 41.73 43.49
CCC 1.26 1.91
Liquidity - Generally, some or all of the remaining available cash flow has been used to fund dividends on company’s common stock
and share repurchases. Company generally operates with a working capital deficit due to efficient use of cash in funding operations,
consistent access to the capital markets and returns provided to shareholders in the form of payments of cash dividends and share
repurchases.
Efficiency - according to company’s working capital ratios, all the operations are conducted within the month, thus company operates
effectively. Also we should take into consideration that all the ratios has improved compared to previous year.
2.3 Cash Flow
(Amounts in millions) 31/01/2021 31/01/2020
Net cash provided by operating activities 36,074 25,255
Payments for property and equipment (10,264) (10,705)
Free cash flow 25,810 14,550
Net cash used in investing activities(1) (10,071) (9,128)
Net cash used in financing activities (16,117) (14,299)
Net cash provided by operating activities during 2020 decreased when compared to the previous fiscal year primarily due to
the contribution to Asda pension plan in anticipation of its future settlement, the inclusion of a full year of Flipkart operations,
and the timing of vendor payments
Net cash used in investing activities decreased during 2020 and generally consisted of payments for business acquisitions and
to expand our eCommerce capabilities, invest in other technologies, remodel existing stores and club and add new stores and
clubs.
Net cash used in financing activities increased during 2020 and generally consisted of transactions related to short-term and
long-term debt, financing obligations, dividends paid and the repurchase of Company stock. Transactions with non-controlling
interest shareholders are also classified as cash flows from financing activities.
