Financial Outcomes of Wal-Mart Inc

WAL-MART INC 7

Our learning team will analyze the financial outcomes of the Wal-Martstores Inc, which operates retail stores in various formats indifferent parts of the world. The company operates its businesses inthree distinct segments, the Wal-Mart US, the Wal-Mart Internationaland the Sam’s club. The Wal-Mart US caters for all Wal-Martoperations in the US, whereas the Wal-Mart International and theSam’s Club are in charge of Wal-Mart’s businesses in other partsof the world. The Wal-Mart Inc operates three major businesscategories that include the wholesale businesses, retail businessesand other small-scale businesses such as supermarkets, discountingshops, hypermarkets, warehouse clubs, and restaurants company(Wal-Mart Inc, 2015). In addition to wholesale and retail businesses,Wal-Mart offers branded services such as hard and soft goods, as wellas some private label items, including the consumables, fuels,groceries, office and entertainment equipments. The Wal-Mart Inc wasstarted on the second of July in 1962, with the headquarters inBentonville-Arkansas US, by James Lawrence Walton and Samuel MooreWalton. The company has continued to display extemporal performanceup to date, leading to the increased need to invest in the company(Wal-Mart Inc, 2014).

As members of the group, we believe that a critical analysis of theperformance of the Wal-Mart company will be essential in forming ouropinion on the most probable financial outcome of the company. Tofulfill our learning initiative, we will form three financialoutcomes, evaluating the estimates depending on the company financialoperations over the last few years to determine the most likelyoutcome. The estimate financial outcomes for the Wal-Mart Companywill range of pessimistic and optimistic outcomes depending on thebusiness environment of the Wal-Mart (Wal-Mart Inc, 2015).

51.03% of the Wal-Mart shares are held by individual shareholders,17.86% by institutions, whereas the remaining 13.21% is owned by themutual fund holders. The business has enjoyed extemporal performancesince its inception, currently reporting a net equity of 84.94USDbillions in 2014 financial year. The Wal-Mart Inc operates over sixthousand retail units operated in over twenty-seven countriesthroughout the world where Wal-Mart has its operation. The companyserves nearly a hundred and forty million customers in weekly basis,who have led to the increased revenue enjoyed by the company since2011. In 2014 alone, the net sales increased by more than USD5billion with the representing a 1.8% increase from the previous year(Wal-Mart Inc, 2014). The net sales of the 2014 fiscal excluding theimpacts of inflations, exchange rates fluctuations and acquisitions,reported a 4.6% increase from the previous year. Within the year, theWal-Mart company added more than 12.5 million square feet for itsinternational operations, including more than three hundredoperational stores all over the world. This has increased thecompany’s total portfolio to six thousand, one hundred storesglobally. Through its operations, the company has strengthened itsposition in China, Mexico, Chile, and Brazil, further increasing itsmarket base, thereby increasing possibilities of more income(Wal-Mart Inc, 2014).

Wal-Mart has repositioned itself to win the convergence of thephysical retail trade. As the members of the group, we believe thatthat the Wal-Mart Inc will continue to grow in the 2015 fiscal year,making it a multi-format portfolio. The core leadership of a companyis rolling out plans to accelerate the company roll out to othermarkets, especially the developing markets. The company has targetedto establish between twenty-one and twenty-three million square feet,equal to three hundred and eighty-five to four hundred and fifteenretail units (Wal-Mart Inc, 2014). This will increase the efficiencyof Wal-Mart Inc in easing the access of consumables, fresh foods,pharmacy, and fuel among others. The management hopes to connect thecompany’s physical assets to broader assortments available throughonline platforms. This will promote an all-time access to Wal-Martservices, further increasing the client base (Wal-Mart Inc, 2014).

As the members of this team, we believe that Wal-Mart Inc will have asuccessful financial position in the upcoming years. The interactionof the various factors within the business internal and externalfactors will be imperative in increasing the revenue of the company.Its diversified trading sections such as supermarkets, warehouses andrestaurants will increase the company’s revenue (Wal-Mart Inc,2015). The increased rollout process will be imperative in increasingthe client base hence increasing revenue, thereby increasing owners’equity and shareholders’ dividends.

The company has displayed an upward trend since 2011 the net salesgrowing over the past five years, which has led to a thirty percentincrease in the earning per share. Sixty-eight US billion dollars hasbeen returned to shareholders through dividends and sharesrepurchasing. In 2014, there was a twelve percent return onshareholders’ investments, which is an indication of futureprofitability (Wal-Mart Inc, 2014).

InitialInvestment $5.6 (In Billions)

Mostlikely interest rate 12%

AnnualCash Flows

Outcome:

Optimistic$ 38.18

MostLikely $ 21.24

Pessimistic$ 11.07

NetPresent Value

Outcome:

Optimistic$30.47

MostLikely $29.98

Pessimistic $30.39We envision that thecompany will have a favorable financial outcome since more investorswill invest in the business after realizing the potential forWal-Mart over the coming few years. The increased employees’ base,as well as financial consultants of the company, gives it acompetitive advantage over other competitors hence likelihood forsuccess. The adoption of new technologies such as the ChineseYihaodian mobile application software among other technologicaladvancements is key to increasing owner’s equity (Wal-Mart Inc,2014). These technological advancements are intuitive and areprojected to have an eightfold increase in annual transactions. This,coupled with the wider home market enjoyed by Wal-Mart, forms astrong financial base that can be trusted to bring forth profitablefinancial outcomes over the coming years (Wal-Mart Inc, 2014).

Despite increased possibilities of favorable outcomes, we feel thatthat the financial outcome of Wal-Mart Inc would not be highlysuccessful owing to many factors that affect the internationalmarket. Among these factors include the fluctuating exchange rates,foreign business policies in different countries, as well asincreased competition from local industries, as well as othermultinationals (Wal-Mart Inc, 2015).

From the aforestated, we selected the Wal-Mart Inc, a companyestablished n the US in 1962 n the US, having subsidiaries ntwenty-seven countries n the world. The company has three operationalsections, the Wal-Mart US, the Wal-Mart International and Sam’sClub. The company operates wholesale and retail businesses,restaurants supermarkets and warehouses including bladed items suchas electronics. The company has increased its operation in thedeveloping countries, which has increased the clientele base,increasing the net sales. Increased net sales translate to afavorable business outcome, hence the probability of increasedowners’ equity. The adoption of new technology as well has alsoincreased the possibilities of favorable outcomes, with factors suchas the fluctuating exchange rates harboring the extemporal financialoutcome of the business. Calculations of the probable outcomes arebased on both the external and internal business environment, helpingin the formation of the most accurate financial outcome for thesucceeding years. This information will be vital for investors sinceit elucidates them on SWOT analysis, which is vital before investingin any business.

References

Wal-MartInc, (2014) SoMany Ways of Saving Money and Living Better,Retrieved fromhttp://cdn.corporate.walmart.com/66/e5/9ff9a87445949173fde56316ac5f/2014-annual-report.pdf

Wal-MartInc, (2015). Savingpeople money so they can live better.Retrieved from http://corporate.walmart.com/our-story/