Walmart Inc. Historical, Current, and Future Financial Analysis

Your paper should approach 20-pages and should be viewed as a term paper. Ask your instructor any questions in the Virtual Office.

Refer to the following documents found in Course Documents to help you with this assignment:

• Format for the Walmart Research Paper
• Walmart Proforma Income Excel Spreadsheet
• Walmart Ratio Solutions 2017 LAPM (Use this as a guide.)

In this assignment, you will be assessed based on the following Outcomes:

MT482-6: Determine the value of a company through conducting effective earnings forecasts and analysis.

GEL-1.02: Demonstrate college-level communication through the composition of original materials in Standard English.

This is a challenging activity. You should prepare to spend substantial time working on your response.

In this research paper, you will dig deep into the financial statements of Walmart. You will analyze the company’s past financial performance to help you forecast their future business, profitability, and cash flow. You will use these results to forecast the value of the company, what you think the company is actually worth today. You will compare your value to the current stock price, explaining any differences.

This is how decisions to buy and sell stock, and to buy and sell companies are made every day all over the world. The nightly business news is full of the “buy, sell, and hold” recommendations derived from analysis like this. I bet those jobs pay very nicely, don’t you!

Your paper must include the following criteria in addition to a title and references page:

• Executive Summary: This is a 1-page summary of the entire paper that highlights the key results of your analysis and the resulting conclusions, and a summary of their defense.
• Table of Contents: List of the sections in your paper.
• Introduction: The company’s story- past, present, future. Include who they are (include current events and interesting facts), what they do (products), when they began (how long), and where they do business. Discuss the markets they operate in globally, the current market trends, and their competitors. (This should be at least 2-pages, likely more.)
• Financial History: (3-year analysis of the company’s performance. Your report will include the ratio results plus an explanation and analysis of each ratio. Include the ratio, its results, and what the results mean for the company. (Liquidity and Debt, Asset Management, Profitability, and Market ratios. See ratio detail below.) Were there changes in the ratios? What could have caused the change? You must include an evaluation section of what each type of (LAPM) ratio means over the three years, then an overall comparison to validate your conclusion. (Show you understand and know the ratios.)
• Financials Today:
• Current

year with comparison to a competitor. What are they doing? How are they doing now? Add current events and focus on the current financials. Include an evaluation for each type of (LAPM) ratio for the current year, then an overall comparison to validate your conclusion. Include your findings for your competitor.

• Financial Future: The story behind your analysis of your forecast of the future based on your spreadsheet. Why did you choose the specific growth rates? What impact did they have on the value of Walmart? Use the Walmart Proforma Income Excel spreadsheet located in Course Documents.
• Conclusion: Your recommendation with justification of how much Walmart is worth. How much do you forecast each share to be worth? Defend your choice.

Required Ratio Analyses

Liquidity and Debt Ratios (L)

Current
• Quick
• Total Debt to Total Asset

Asset Management Ratios (Activity A)

• Inventory Turnover
• Fixed Asset Turnover
• Total Asset Turnover

Profitability Ratios (P)

• Profit Margin on Sales
• Return on Assets
• Return on Equity

Market Value Ratios (M)

• Price Earnings Ratio
• Market/Book

Start your Walmart research at the website below. Click on everything and explore. This website will be the sole source of financial information for this assignment.

Walmart, Inc.

(n.d.).

https://www.msn.com/en-us/money/stockdetails/finan…

This assignment requires the following in addition to the criteria above:

• Submit your paper in a Microsoft Word® document. Include a title page with your name, course number, instructor name, date, subject, and include a brief statement that you (and you alone) produced the paper. Further format details will be provided by your instructor.
• Submit your completed Walmart Proforma Income spreadsheet to the Dropbox.
• Respond to the questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions. Your paper should be highly organized, logical, and focused.
• Your paper must be written in Standard English and demonstrate exceptional content, organization, style, grammar, and mechanics.
• Your paper should provide a clearly established and sustained viewpoint and purpose.
• Your writing should be well ordered, logical, and unified, as well as original and insightful.
• A separate page at the end of your research paper should contain a list of references in current APA style. Use your textbook, the Library, and the internet for research.
• Be sure to cite in-text citations where appropriate and reference all sources. Your sources and content should follow proper current APA style. Review the APA formats found in the Writing Center accessed through the Academic Success Center within the Academic Tools area of the course. (Your paper should include a title page, paper is double-spaced, in Times New Roman 12-point font, correct citations, Standard English with no spelling or punctuation errors, and correct references on the references page.)
• Clear business writing; spelling and grammar acceptable; effective use of current APA style; followed the required format and instructions.
• Include the elements detailed in the grading rubric.

Terminal Value
Year 5
Walmart — Pro Forma Income Statements ($ in millions) M&A – Current Value Estimate – 2019 Actual
Year
Fiscal Year
2019
2020
2021
2022
2023
2024
$514,405
$523,664
$533,090
$542,686
$552,454
$562,398 Growth Rate
$385,301
$272,305
$277,207
$282,197
$287,276
$292,447
Gross Profit
$129,104
$251,359
$255,883
$260,489
$265,178
$269,951
Fixed Costs – SG&A
$96,469
$98,591
$100,760
$102,977
$105,243
$107,558
2.20%
1.80%
Sales
Variable Costs
52.00%
Other Income
($4,800)
Depreciation
$10,678
$10,870
$11,066
$11,265
$11,468
$11,674
EBIT
$17,157
$141,897
$144,057
$146,247
$148,468
$150,719
$4,790
$35,474
$36,014
$36,562
$37,117
$37,680
$12,367
$106,423
$108,043
$109,685
$111,351
$113,039
$6.18
$53.21
$54.02
$54.84
$55.68
$56.52
$117,293
$119,109
$120,950
$122,819
$124,714
0
0
0
0
0
0
$0
$117,293
$119,109
$120,950
$122,819
$2,724,618
Taxes
25.00%
Net Income
EPS – Before Interest Exp.
1.80%
Cash Flows
Operating Cash Flow
(OFFER)
Residual Value
Capital Spending
Cash Flow
Discount Rate (WACC)
12.00% assumed
Net Present Value
$1,909,843.76 Our current estimate of WalMart’s total value in Millions
Shares Outstanding
Value Per Share
$2,599,904.44 PE Mulitple
2,000,000,000
$
954.92
Based on your growth, PE, WACC, and Outstanding Shares Assumptions
this is your valuation of Walmart’s shares
Students, you change the numbers above in RED to reflect your analysis of the company … the value of the
company will update based on you assumptions …
Assumptions of growth, cost structure, taxes, PE Ratio, WACC, and Shares Outstanding.
23 assumed
Walmart 2019 Ratios
Liquidity & Debt
Ratios
Current
Quick
Total Debt to Total Asset
Current Assests/Current Liabilites
(CA – Inventories)/Current Liabilites
Total Debt/Total Assests
Asset Management
Inventory Turnover
Fixed Asset Turnover
Total Asset Turnover
CGS/ Inventories
Sales/ Net Fixed Assests
Sales/Total Assets
Profitability
Profit Margin on Sales
Return on Assests
Return on Equity
Net Income/Sales
Net Income/Total Assets
Net Income/Common Equity
Market Value
Price Earnings Ratio
Market/Book
Price of Shares/Earning Per Share
Market Price/Book Value (Per Share)
per year
0.8620
0.2189
59.49%
8.39
4.26
2.44
2.81%
6.86%
17.54%
14.92
2.58
Format of the Walmart Research Paper
In this research paper, you will dig deep into the financial statements of W almart. You
will analyze the company’s past financial performance to help you forecast their future
business, profitability, and cash flow. You will use these results to forecast t he value
of the company; what YOU think the company is actually worth today. You will
compare your value to the current stock price, explaining any differences.
This is how decisions to buy and sell stock, and to buy and sell companies are made
every day all over the world. The nightly business news is full of the “buy, sell, and
hold” recommendations derived from analysis like this. I bet those jobs pay very
nicely, don’t you!
Your paper must include the following criteria in addition to a title and refere nces
page:
Executive Summary: This is a 1-page summary of the entire paper that highlights
the key results of your analysis and the resulting conclusions, and a summary of their
defense.
Table of Contents: List of the sections in your paper.
Introduction: The company’s story- past, present, future. Include who they are
(include current events and interesting facts), what do they do (products), when they
began (how long), and where they do business. Discuss the markets they operate in
globally, the current market trends, and their competitors. (This should be at least 2 pages, likely more.)
Financial History: (3-year analysis of the company’s performance. Your report will
include the ratio results plus an explanation and analysis of each ratio. Include the
ratio, its results, and what the results mean for the company. (Liquidity and Debt,
Asset Management, Profitability, and Market ratios. See ratio detail below.) W ere
there changes in the ratios? W hat could have caused the change? You must include
an evaluation section of what each type of (LAPM) ratio means over the three years,
then an overall comparison to validate your conclusion. (Show you understand and
know the ratios.)
Liquidity & Debt
Ratios
Current
Quick
Total Debt to Total
Assets
2018
2017
2016
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
After each LAPM box you will include your words regarding the ratios in that box.
Focus on demonstrating your understanding of what the individual ratio means and
your assessment of W almart’s financial conditions based on the results. The paper
should include an individual evaluation section for each ratio, over the three years,
and an overall comparison to validate your conclusion of W almart’s financial
condition.
Asset Management
Ratios
Inventory Turnover
Fixed Asset Turnover
Total Asset Turnover
2018
2017
2016
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
Here you should include an individual evaluation section for each ratio (over the three
years) then an overall comparison to validate your conclusion. Show you know and
understand the ratios.
Profit Ratios
Profit Margin on
Sales
Return on Assets
Return on Equity
2018
xxx
2017
xxx
2016
xxx
xxx
xxx
xxx
xxx
xxx
xxx
Here you should include an individual evaluation section for each ratio (over the three
years) then an overall comparison to validate your conclusion. Show you know and
understand the ratios.
Market Ratios
Price Earnings Ratio
(PE)
Market to Book
2018
xxx
2017
xxx
2016
xxx
xxx
xxx
xxx
Here you should include an individual evaluation section for each ratio (over the three
years) then an overall comparison to validate your conclusion. Show you know and
understand the ratios.
Financials Today: Current year with comparison to a competitor. What are they
doing? How are they doing now? Add current events and focus on the current
financials.
Include an evaluation for each type of (LAPM) ratio for the current year, then an
overall comparison to validate your conclusion. Include your findings for your
competitor.
Liquidity & Debt Ratios
2019
Current
Quick
Total Debt to Total Assets
xxx
xxx
xxx
Competition or
Industry
xxx
xxx
xxx
Here you should include an individual evaluation section for each ratio with a
reflection on this year’s comparison to past years. Also, include a comparison to the
results of the competitor you chose or the industry averages. Then, an overall
comparison to validate your conclusion.
Asset Management Ratios
2019
Inventory Turnover
Fixed Asset Turnover
Total Asset Turnover
xxx
xxx
xxx
Competition or
Industry
xxx
xxx
xxx
Here you should include an individual evaluation section for each ratio with a
reflection on this year’s comparison to past years. Also, include a comparison to the
results of the competitor you chose or the industry averages. Then, an overall
comparison to validate your conclusion.
Profit Ratios
2019
Profit Margin on Sales
Return on Assets
Return on Equity
xxx
xxx
xxx
Competition or
Industry
xxx
xxx
xxx
Here you should include an individual evaluation section for each ratio with a
reflection on this year’s comparison to past years. Also, include a comparison to the
results of the competitor you chose or the industry averages. Then, an overall
comparison to validate your conclusion.
Market Ratios
2019
Price Earnings Ratio (PE)
Market to Book
xxx
xxx
Competition or
Industry
xxx
xxx
Here you should include an individual evaluation section for each ratio with a
reflection on this year’s comparison to past years. Also, include a comparison to the
results of the competitor you chose or the industry averages. Then, an overall
comparison to validate your conclusion.
Financial Future: The story behind your analysis of 5-year proforma forecast of the
income statement for W almart based on the spreadsheet. Your analysis will include
why you chose the specific rate changes you did in your version of the spreadsheet.
You will also provide an analysis of the impact your assumptions had on the value of
Walmart.
You must submit your completed spreadsheet. Do not attach it to the paper or copy
paste it into the paper. Submit it separately in the same Dropbox as you submit the
paper.
Conclusion: In this section include your summary of your findings based on your
complete analysis plus your analysis, with justification, of how much you think
Walmart’s stock is worth today. Defend your analysis contrasting it to the actual price
of W almart’s stock today, and make a recommendation as to whether investors
should or should not buy W almart stock. Defend that recommendation.
References
Start your W almart research at the website below. Select everything and explore. This
website will be the sole source of financial information for this assignment.
Walmart, Inc. (n.d.). https://www.msn.com/en- us/money/stockdetails/financials/fi126.1.W MT.NYS