Wal-Mart Financial Statement Analysis
Mathematics models represent the financial asset performance as well as portfolio of a company or any other related investment. In addition to being used in the calculations of financial statement data, economic data and market data, mathematics is also used in the examination of the events that explain the present conditions of a company and to help in determining the bearings of a company’s future prospects basing on financial statements.
Mathematical ratios are used in assessing the operating performances of the company so as to determine if the company is applying its assets in ways that are profitable and efficient. Through the assessment of financial conditions of the company, it is possible to tell if the company meets its obligations.
Wal-Mart is a retail giant that has remained on the top spot edging some of its competitors like Exxon Mobil for more than two years. In the 2014 fiscal year, the net sales of Wal-Mart totaled to $ 473.1 billion, and this was a 1.6 percent increase compared to the previous years’ performance (Fortune, 2014). While its sales have increased domestically, Wal-Mart results in the recent past have been hurt by the payroll tax cut expiration, reduction in the food stamp program in the United States and the poor winter weather.
Under the recovery method, a company does not recognize any income that is related to a sale transaction at the time the sale cost element has been cleared. The methods are applicable when the company has a considerable uncertainty in relation to the collection of the receivable. The cost recovery methods are applied when the cost of sale and revenue are recognized in a transaction while the associated gross profit has been initially differed, cash has been received and thus applied in the recovery of the cost of goods that have been sold and after all the goods that have been sold are fully recovered hence the remaining cash receipts are recognized as profit. All cost recovery revenues have to be recorded in the financial statements as well as the revenues collected through various levies and fee charge in an effort to improve the accountability for and visibility for cost recovery activities.
Some of the indebtedness witnessed on Wal-Marts’ balance sheet include, short term borrowings that amounted to $ 7, 670, long-term debt amounting to $4, 103, obligation under capital leases amounting to $309, and long term obligations under capital leases that amounted to $41,771 (Fortune, 2014). The total obligations and debt under capital leases together form the carrying amount, and they represented the total of the carrying values as per the balance sheet date of all debt together with the capital lease obligations.
According to the Balance Sheet of Wal-Mart, its revenues were $ 47, 629 million, profits $ 16, 022 million, total assets $ 204, 751, the market value at $ 246, 805 and total shareholder equity $ 76, 255. The assets of Wal-Mart increased by 3.4 percent, earning per share in the last ten years increased by 9 percent and the annualized total return to investors in the last 10 years increased by 6 percent (Fortune, 2014).
Percentages and ratios are used in the evaluation of output generated and revenues by the assets of Wal-Mart. Operating performance ratios are used in the description of the relationship of the operations levels, and assets of Wal-Mart required to sustain operating activities. The ratios and percentages are also used in measuring how efficiently Wal-Mart generates revenues in relation to its investments in total or fixed assets.
Fortune. (2014). Fortune 500 2014. Retrieved from http://fortune.com/fortune500/