The informant on contained in a company’s financial report has several important uses. Managers and senior traders of a business can take extrapolated financial data from the income statement which details monthly earnings as well as the company’s liabilities and equity position. This information can then be used to analyze and forecast future annual budgets. Additionally information obtained d in these multiple types of reports can also be used to proactively predict trends that may have a negative financial impact on company’s future operations.
On another note a company’s finance al reports are used by lending institutions to determine their ability to receive and repay loans us De to finance business operations. Coked at many different companies to research when reviewed the final w eek five paper requirements. Decided to research and profile Walter, Inc. , as I spend d much of my monthly food allowance at Walter personally, and would like to see and undo restart just how financially stable this company appears on paper.
As analyze Walters final Call data will illustrate and explain the importance of the horizontal analysis using specific gauges taken from Walter’s previous past two years of annual financial records. I will focus on Walter’s last 3 two years, Current Ratio, Quick Ratio, Cash to Current Liabilities Ratio, and alas lay I will detail Walter’s net liquidity potential. For my final analysis I will communicate my t Houghton and investment suggestions for potential future investors interested in buying stop CSS in Walter. Walter, Inc.
Business Report Sam Walton opened the Walter Inc chain of stores in 1969. There are a tot of ten thousand one hundred fifty stores across the entire world. Walter ret ails a large assortment of basic merchandise to consumers such as, food, electronics, ho use ware, health and beauty, jewelry automotive, hardware and miscellaneous other general proud acts. (Waianae, 01 2) Based on my research Walter’s business functions are organized into three operating categories, United States Walter, the International Walter and the Cam’s CLC pub stores.
Walter operates several different types of store formats, I. E. Discount stores, superstructures, markets, express stores, and a large commerce online business s web store online. (Walter, 2012). Walter has retail stores in all fifty states to include Puerco R Additionally Walter has retail stores in fourteen other countries. Here is a list t of the countries entirely owned by subsidiaries of Walter. Japan, Argentina, Brazil, Canada an the United Kingdom. Walter also has joint partnerships in China and India. Walter ha s majority owned retails subsidiaries in five Central American countries.
Walter also pr vides bill payment, money orders, and check cashing financial services which also gene rate additional 4 revenue. Walter has its own licensed brands and markets these brands thru private label store brands. (Walter, 2012) One leading retail store that competes with Walter is Target Corporation. Ta regret offers retail products at a higher price hoping to draw the wealthier consumer to PU reaches at their stores. According to my online research “Why Walter Beats Its Competitors”, Walter is facing growing opposition from individuals who simply do not want the store I n their communities.
Small business mom and pop boutiques would like to see the Walter retailer be removed from the small cities and towns citing that these stores are “destroys Eng” the look of “Main Street” (Alpha 2012) Horizontal Analysis of Income Statement and Balance Sheet The definition of a Horizontal analysis is the historical comparison of a comma NYSE financial statements. Financial analysts use this data to forecast operational try ends or abnormalities. Typical accounting periods captured for this type of report are month to month and year to year.
When a financial analyst reviews these types of reports man eager can get a broad view look at the company’s operating expense from one year to the nee Ext. This type of report can be very useful in the management of a company. Balance sheets c an best be reviewed by extracting historical data via a Horizontal analysis. Assets, liabilities and owe nurse equity can all be analyzed and compared to determine if any negative or positive trends are apparent. Walter prides itself on being the cheapest everyday price and to help guar tee their success offer price matching tactics, which to date have worked very well for Walter.
Let’s begin by analyzing Walters income statement for the past three years which h reflects a positive growth pattern for every entry of the Income Statement The Income attachment Cheesecake 5 Final paper (Walter Financial Analysis Report) 5 Domestic entry is the only entry on this income statement that reflects a non growth number. The main reason the Income Tax numbers show a downward trend is likely that the e Walter staff accountants have found many tax loop holes to reduce the actual company in come tax burden owed.
Lets take a look at the financial data. Walter’s revenue increased over these three years by $39,736 M which is a gross increase of 9. 1%. Additionally the Cost of Sales climbed from $304,657 M to $335,127 M which emulates a steady trend Of 9. 1%. I found d these numbers interesting as I would have expected to see a much higher cost of sales due to the increased costs of goods during these last three years of economic hardships seen in the unit De States. Hallmarks operating income increased from $23,950 M in 2010 to $26,558 in 2 012 which depicts a 9% growth.
Walter retail stores net income increased from 2010 to 011 very slightly and then declined from 201 1201 2 with a calculated net increase of $1 539 M or 9. 1 Now let’s take a look at the Consolidated Balance Sheet for 201 2 Walter had $40. 71 Bin inventory and assets with an average 1% increase over a three year period. The e total inventory made up 74% of Walter’s current assets. This included 21 % of the retail chaw ins total assets. My translation of these financial numbers is that people in the United States a re making purchases on credit versus cash at the registers.
Let me also note that Walla art’s Accounts Receivables reflect $323 M in Bad Debt/ Doubtful Accounts as a result of people using credit versus cash. These accounts will more than likely be written off and put again SST the taxable income earned annually. Another figure on the Consolidated Balance Sheet is the $BIBB in Property, plant & Equipment which portrays an increase over the last three ye ears due to the 6 development and opening of new retail chains. The Common Stock par value dropped from $MM in 2010 to $MM in 2012.
As you can see collecting and preparing a horizontal analysis of Walter’s final uncial statement has helped in determining the ultimate financial direction of this la GE company. Let’s move on to another very helpful tool for financial analyst called the Ratio Anal his. Ratio Analysis Accountants and financial analyst use the ratio analysis to determine a comma NYSE current business performance compared to past years of business performance. This analysis can be isolated to past quarter performance as well. Many times analyst or account nets can use this data to identify possible operational issues.
Ratios are very good tools to compare other similar types of companies. Another ratio that is helpful to determine a company’s liquidity is the Current Ratio. According to the President of Walter “the company has performed be otter than its competitors in the areas of job creation increased Redevelopment’s (ROI), better customer service, competitive pricing and much more. (Walter, 201 2) In order for me t o quantify this statement from the CEO of Walter I am going to extract the following data a ND financial calculations using the Current Ratio, Quick Ratio, and Cash to Current Liability sees Ratio over the previous two year.