Walmart is a national retail chain that makes billions of dollars each year. Selling a wide variety of merchandise, such as clothes, computers, cell phone products, kitchenware, DVD’s, and groceries, Walmart has earned a reputation as a store in which people can do all of their shopping in one fell swoop. When analyzing their 2014 financial report, which focuses on the store’s annual income statement and balance sheet, as well as their inventory, I discovered some key aspects pertaining to Walmart’s overall profitability.
In 2014, Walmart’s overall net income was listed at $15.88 billion. However, the store may have some reason to be concerned, Walmart losing $2.7 billion in revenue, as compared to last year. In terms of cash only, Walmart did exceptionally well financially this past year, but its cash and cash equivalents did experience a decrease from 2013. In 2014, its cash and short term investments were documented as $7.28 billion, as opposed to its 2013 numbers of $7.78 billion. Total accounts receivables also experienced somewhat of a dip, dropping form $6.77 billion to $6.68 billion. While the number is not an exorbitant amount of decrease, possible causes could be unwise decision making in the form of bad investments, the loss of revenue due to Walmart’s doubtful accounts listed as $119 million. That number is $4 million more than bad investments that did not pan out for the retail chain in 2013 .
In terms of cash and cash equivalents, Walmart has many assets that can bring in money if sold, including property, plant, and equipment. Assets that fall into that category include buildings, land and improvement, computer software and equipment, and additional plant property and equipment. Walmart also has tangible and intangible assets, the company’s total assets listed at $204.75 billion, which was a jump from $203.1 billion in 2013. Unfortunately, Walmart’s overall cash equivalents have declined from last year. Although Walmart also has cash equivalents listed in its report in the form of preferred stock and treasury stock, both of these numbers are listed at zero, which is an issue that the company needs to take notice of .
Fortunately, Walmart did better in 2014 than 2013 in term of cash dividends, which may help to balance out the drop in cash equivalents this past year. In terms of dividends, the organization brought in $6.14 billion versus last year’s total cash dividend rate of $5.38 billion. Walmart’s cash dividend trend within the past five years gives the company reason to be hopeful. In 2010, its dividends were $4.22 billion. In summary, from 2010 to 2014, Walmart’s overall dividend rate jumped $1.92 billion. If this upward trends continues for the next few years, the organization should be in excellent financial shape and continue to be one of the most profitable and successful retail stores internationally .
Without a sizeable inventory of products and merchandise for in-store and online customers, it is hard to be a successful business. Walmart’s inventories in the United States are calculated by employing the last-in, first-out (LIFO), method of inventory versus the first-in, last out (FIFO) methods used by other organizations, such as Sam’s Club. On its financial report, a list of the business’s inventories included works in progress, raw materials, finished goods, and progress payments. As far as Walmart’s inventory, the store’s inventory increased from 2013 to 2014, its total inventory $43,803 million and $44,858 million respectively. The rise in the store’s overall inventory has the promise of being a positive trend for the company, Walmart’s inventory also jumping from $40,714 million in 2012 to $43,803 in 2013 .
Walmart has shown a high successful rate in terms of overall income, revenue, and profits for the past several years. While there is cause for some concern in terms of its cash equivalents and net income drop in the past year, the company has still shown increases in overall sales/revenue and cash dividends. I feel that Walmart will most likely be able to maintain its top levels of success and profitability.