Wal-mart Annual Report Analysis Matthew Walter Professor: Evelyn Hume Intermediate Accounting I 06/12/2011 Who are the firm’s auditors? Do they provide a clean opinion on the financial statements? Wal-Mart is audited by Ernst & Young LLP. Ernst & Young’s believe the financial position of Wal-Mart is clearly depicted in their financial statements and in tune with the U. S. generally accepted accounting principles. Have there been any subsequent events, errors and irregularities, illegal acts, or related-party transactions that have a material effect on the financial statements?
Wal-Mart subsequent events on March 4, 2010 the company’s Board of Directors approved an increase in the annual dividend to 1. 21 a share. Describe the trend in total assets and total liabilities for the years presented. Wal-Mart’s total assets increased by 7,277 million from 2009 to 2010. Similarly, the total liabilities of Wal-Mart have increased 1,427 million from 2009 to 2010. What are the company’s three largest assets for the most recent year presented? Wal-Mart’s three largest assets for 2010 were inventories, buildings and improvements, and fixtures and equipment.
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What are the company’s three largest liabilities for the most recent year presented? Wal-Mart’s three largest liabilities for 2010 were accounts payable, accrued liabilities, and long term debt. What types of stock does the company have? How many outstanding shares are there for each type of stock for the most recent year presented? Wal-Mart has preferred and common stock options. In 2010 there were no outstanding shares of preferred stock. Also, there were 378 million outstanding shares of common stock in 2010.
Does the company use the single-step income statement, multiple-step income statement, or a variation of both? Wal-Mart uses the multiple-step income statement. Does the income statement contain any separately reported items, including discontinued operations or extraordinary items, in any year presented? If it does, describe the event that caused the item. (Hint: There should be a related footnote. ) Wal-Mart reported a loss of 79 million from discontinued operations. The event that caused this loss was because Wal-Mart had shares outstanding that were not included in the diluted net income per share.
Describe the trend in net income over the years presented. Wal-Mart’s net income has increased over the last three years from 2008 to 2010. An increase of 19% from 2008 to 2009 and an increase of 14% from 2009 to 2010. Does the company have other comprehensive income? If yes, what is the nature of the transaction(s)? Wal-Mart does not have any other comprehensive income to report. Does the company use the indirect or direct method of the cash flow statement? Wal-Mart uses the direct method of the cash flow statement. What is the trend in cash from operations for the years presented?
Wal-Mart has had an increase in cash from operations each year from 2008. From 2008 to 2009 there was about a 3,000 million increase and from 2009 to 2010 there was another increase of about 3,000 million. What are the two largest items included in cash from investing activities? Wal-Mart suffered a loss for cash from investing activities. Proceeds from disposal of property and equipment are the only positive figure at 1,002 million. For the year ended 2010 Wal-Mart reported a loss of 11,620 million from investing activities.