Capital Structure Analysis – Walmart – 3
Capital Structure Analysis – Walmart September 13, 2011 GB550: Financial Management Unit 3 Professor Ana Machuca Part I – The Abstract Wal-Mart is one of the biggest retail chains of the world (Sampson, 2008). Hence it’s very extensive financial reports were studied carefully in detail, in order to understand and evaluate the company’s operations and performance in terms of financial ratios and relevant cost drivers and hence suggest recommendations to improve the overall business of the company while providing special emphasis on improvement of HR department; maintaining cost efficiency.
For this, first of all, some key financial ratios were considered for evaluation. Some of these include Debt/Equity Ratio, Current Ratio, Quick Ratio, Inventory Ratio, P/E Ratio and Book Value/Share. On the basis of in-depth study on these key indicators, important results about the company’s corporate performance were derived which helped in analyzing the company’s actual financial position in the market and also determining its business competitiveness.
Since cost drivers are significantly important for HR department, identifying them and then calculating overhead rate per employee of these cost drivers was quite essential for evaluation of current financial standing of the company (Knack & Keefer, 1997). Later, these were also compared to figures of competitive rivals in order to know the effectiveness of HR department and the business as a whole. Finally, after detailed scrutiny of the financial impact of the key factors, some healthy recommendations are provided that are aligned to both the needs of the business as well as best practice principles.
This will help achieve a greater acceptance of change and a means to move forward in achieving greater transparency and consistency with HRM practices and policy compliance in order to make this top retail brand even better. The purpose of this report is to show a preview of capital structure, business risks related to the capital and assumptions based on theories, evidence and implications. Every business decision is associated in one way or another with the financial condition of the organization.
The results of a working capital analysis will assist in the determination of organization’s ability to remain in a particular line of business (Sampson, 2008). The most imperative areas that are found in the Capital Structure Analysis Report fall into the following categories: Working Capital Management, Valuation and Investment, and Cost of Capital. The company’s operational processes within each area can be examined and related financial data reviewed.
Once the financial data is collected and calculated potential areas for improvements can be identified and corrective or innovative measures can be implemented. As in all businesses, there is always room for improvement. Part II – Table of Contents I. ABSTRACT II. INTRODUCTION III. WORKING CAPITAL MANAGEMENT IV. UNDERPERFORMING COMPANY RATIOS V. RECOMMENDATIONS/STRATEGIES VI. CASH & MARKETABLE SECURITIES VII. SOURCES AND USES OF SHORT-TERM FINANCING VIII. CREDIT POLICY IX. INVENTORY X. VALUATION & INVESTMENT SECTION
XI. COST OF CAPITAL SECTION XII. CONCLUSION XIII. REFERENCES Part III – Preliminary Reference List Ehrhardt, E. B. (2010). Financial Management Theory and Practice. South-Western Publishing. History and Facts about Wal-Mart. (2000-2010). Retrieved September 16, 2011, from https://www. Buzzle. com. Investor Relations Website -10K & 10Q Analysis. (2002-2010). Retrieved September 17, 2011, from https://www. walmart. com. Keefer, S. K. (1997). Does Social Capital Have an Economic Pay-off? A Cross-Country Investigation.
Quarterly Journal of Economics , 1252-1288. Kennon, J. (2010). An Introduction to Capital Structure. Retrieved September 17, 2011, from http://www. beginnersinvest. com. Sampson, S. D. (2010). Category Killers and Big-box Retailing: Their Historical Impact on Retailing in the USA. International Journal of Retail & Distribution Management . Thuermer, K. E. (2006, February). Corporate Strategy: Wal-Mart Asia-Supersized Sales. Retrieved September 17, 2011, from https://www. fdimagazine. com.
