Target Case Study
Name: Thuy Nguyen Date: 03/10/2013 Class: ACFN 310 RESEARCH ABOUT WALMART In 1945, Sam Walton opened his first grocery store - Target Case Study introduction. And then, in 1962, he founded the Wal-Mart at cheap prices located in Rogers, Arkansas. In 2012, Wal-Mart’s sales increased 5. 9% or $ 443. 9 billion over the same period last year (1). By saving money for over million people, Walmart becomes the first company in the world about saving. The question is “why? ” that is because Walmart always find the best way to cutting-edge technology to track how people shop, even cut down the price, Walmart never cuts down the good of items, and always deliver as good as they can.
Walmart recently held a ceremony to celebrate 50 years of helping customers save money and have a better life. Almost 50 years have passed, but Walmart has always been the first choice of all classes of customers, because Walmart ensuring them one thing that all customers will be unable to earn a safe shopping can save money as Walmart. The first part introduces the profile you know about Walmart. The next section I will go into the ratios and guide you how to calculate the ratios through statistics of Walmart. First, I will mention about liquidity ratio and I will take out current ratio.
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Current ratio is calculated by, to find the current asset and current liabilities; you need to look at the balance sheet. This ratio let you know that current liabilities are covered by those assets and it is expected to convert to cash in future. Second, let look at asset management and take inventory turnover to be the sample for this ratio. The calculation is. This shows you how many times the particular asset is turned over. Third, we will get to know the riskless is debt management; this ratio is calculated by. This gives us the knowledge percentage about debt of company; does that company borrow lot money?
Fourth, it will be profitability and operating profit will representative for this ratio with equation. This ratio means earn before income tax per dollar of sales. And the last one will be market value with price/earnings (P/E) = Stock Price / EPS; this is showing the dollar amount investors will pay for one dollar of current earnings. In the upper part, I show you some ratios: how to calculate them, and its basic meaning. So let’s apply these ratios to the financial statistics for three years of Walmart. I’ll take the last years: 2010, 2011, and 2012. 1. Wal-Mart Stores Inc. Consolidated Income Statement 12 months ended| Jan 31, 2012| Jan 31, 2011| Jan 31, 2010| Net sales| 443,854| 418,952| 405,046| | | | | Operating income| 26,558| 25,542| 23,950| | | | | Operating profit| 5. 93%| 6. 09%| 5. 91%| Source: Wal-Mart Stores Inc. , Annual Reports| | | | | | | | Stock Analysis on Net (www. stock-analysis-on. net)| | | | Copyright © 2012 EBIT Financial Analyses Center| | | | 2. Wal-Mart Stores Inc. , Consolidated Statement of Financial Position, Assets | Jan 31, 2012| Jan 31, 2011| Jan 31, 2010| Inventories| 40,714| 36,318| 33,160| Current assets| 54,975| 51,893| 48,331|
Total assets| 193,406| 180,663| 170,706| Inventory turnover| 10. 9x| 11. 53x| 12. 21x| Source: Wal-Mart Stores Inc. , Annual Reports| | | | | | | | Stock Analysis on Net (www. stock-analysis-on. net)| | | | Copyright © 2012 EBIT Financial Analyses Center| | | | 3. Wal-Mart Stores Inc. , Consolidated Statement of Financial Position, Liabilities and Stockholders’ Equity | Jan 31, 2012| Jan 31, 2011| Jan 31, 2010| Current liabilities| 62,300| 58,484| 55,561| Total liabilities| 117,241| 109,008| 97,470| Walmart shareholders’ equity| 71,315| 68,542| 70,749| Total equity| 75,761| 71,247| 72,929|
Total liabilities and equity| 193,406| 180,663| 170,706| Current ratio| 0. 8x| 0. 88x| 0. 86x| Debt management| 60. 62%| 60. 33%| 57. 09%| Price to earnings| 13. 58x| 12. 54x| | Source: Wal-Mart Stores Inc. , Annual Reports| | | | | | | | Stock Analysis on Net (www. stock-analysis-on. net)| | | | Copyright © 2012 EBIT Financial Analyses Center| | | | Now, we know the exact number of all the ratios of Walmart. And now we want to compare let try Walmart and Target, who will be the company have high revenue by comparing the ratios that we have mentioned above. 1. Current ratio: | Jan 31, 2012| Jan 31, 2011| Jan 31, 2010|
Walmart| 10. 9x| 11. 53x| 12. 21x| Target| 1. 15x| 1. 7x| 1. 62x| The current ratio of Target is poorer than Walmart as we can see. 2. Inventory turnover: | Jan 31, 2012| Jan 31, 2011| Jan 31, 2010| Walmart| 0. 8x| 0. 88x| 0. 86x| Target| 8. 82x| 8. 87x| 9. 10x| The inventory turnover of Target is a lot better than Walmart. 3. Debt ratio: | Jan 31, 2012| Jan 31, 2011| Jan 31, 2010| Walmart| 60. 62%| 60. 33%| 57. 09%| Target| 66. 07%| 64. 56%| 65. 53%| It seems that Target borrows more money than Walmart. Maybe Target tries to issue another way, or maybe they borrow money to pay for the other debt. 4. Operating profit: Jan 31, 2012| Jan 31, 2011| Jan 31, 2010| Walmart| 5. 93%| 6. 09%| 5. 91%| Target| 7. 61%| 7. 79%| 7. 14%| The operating profit of Walmart is lower than Target. 5. Price/earning: | Jan 31, 2012| Jan 31, 2011| Jan 31, 2010| Walmart| 13. 58x| 12. 54x| | Target| 11. 87x| 13. 71x| | In 2011, the Target is higher than Walmart. But in 2012 the situation was reversed, at Walmart with P / E is higher than Target. The comparison above is one of the big one. Now I want to compare the Walmart vs. the industry which the companies are the same with Walmart. I will still compare five ratios in each five categories.
So let see is Walmart working well compares to industry? 1. Current ratio: | Jan 31, 2012| Walmart| 10. 9x| Industry| 0. 8x| The current ratio of Industry is poorer than Walmart as we can see. 2. Inventory turnover: | Jan 31, 2012| Walmart| 0. 8x| Industry| 8. 3x| The inventory turnover of Industry is a lot better than Walmart. 3. Debt ratio: | Jan 31, 2012| Walmart| 60. 62%| Industry| 65. 8%| It seems that Industry borrows more money than Walmart. Maybe Target tries to issue another way, or maybe they borrow money to pay for the other debt. 4. Operating profit: | Jan 31, 2012| Walmart| 5. 93%| Industry| 4. 34%|
The operating profit of Walmart is higher than Industry. 5. Price/earning: | Jan 31, 2012| Walmart| 13. 58x| Industry| 20. 09x| In 2012, the Industry’s P / E are higher than Walmart. Next, I will talk little bit about Walmart’s beta, how thing is going on by looking the beta of this company. Beta is telling us about stock that we use to sell; it is company’s crystal ball. How our stocks are moving in relative to overall stock market. The beta also tells us the risky the stock brings to us. The average is b=1. 0, it the beta shows us below one that means the stocks are not risky, reverse if it higher than one.
Like we can see the table below, the beta is lower than one and that Walmart’s stocks are not risky. We can trust these stocks. Price | Day Change | Bid | Ask | Open | High | Low | Volume | 72. 5| -0. 72| -| -| 73. 01| 73. 50| 72. 44| 17206784| Market Cap (mil)| Shares Outstanding (mil)| Beta| EPS| DPS| P/E| Yield| 52-Wks-Range| 242,529. 7| 3,345. 2| 0. 35| 5. 02| 1. 59| 14. 4| 2. 6| 77. 60 – 57. 18| By looking this graph through 2010 to 2012 of monthly, we can see their price stocks were not increase so much until 2011 and 2012. Their stocks were rising from 50 to 60 in 2011 and 60 to above 70 in 2012.
In conclusion, by going through these seven pages of research about Walmart Company. We have look at the ratios, three year of trend, compare Walmart with Target and Industry to which Walmart belongs, understand about beta, and a line graph of stock prices of this company. After we know of these informations, we can say that Walmart is not bad at all. This company is keep growing over time, because they know how to keep their promise with customers, and provide them a good service. So they keep coming back for Walmart. WORK CITED Duke, Michael. “To our shareholders, associates and customers. ” N. p. Online Posting to https://twitter. com/walmart. Web. 18 Mar. 2013. <http://www. walmartstores. com/sites/annual-report/2012/CEOletter. aspx>. Wikipedia, . “Financial ratio. ” Financial_ratio#Ratios, Web. 18 Mar. 2013. <http://en. wikipedia. org/wiki/Financial_ratio#Ratios>. Forbes, . “WAL MART STORES INC (NYSE: WMT). ” FinancialIndustrial. jsp? tkr=wmt&period=qtr, Web. 18 Mar. 2013. <http://finapps. forbes. com/finapps/jsp/finance/compinfo/FinancialIndustrial. jsp? tkr=wmt&period=qtr>. Stock, Analysis. “Wal-Mart Stores Inc. (WMT). ” Wal-Mart-Stores-Inc#Financial-Statements, Web. 18 Mar. 2013.