ANALYSIS OF WAL-MART’S FINANCIAL STATEMENTS 2

Analysis of Financial Statements of Wal-Mart; NYSE: WMT

Wal-Mart is a multinational retail giant that is based in the USA. It operates thousands of
hypermarkets, grocery stores, and discount department stores. Starting as a small store in 1962,
the company has grown over the years to become the world’s largest company by number of
employees and revenue (Wal-Mart, 2019). It’s headquarters are in Bentonville in the state of
Arkansas, USA. As of 2018, Wal-Mart ranks first on the Fortune 500 list of companies (Fortune
500, 2019). It is traded on New York Stock Exchange (NYSE) and its ticker symbol is WMT.
This paper will analyze the company’s financial statements that are presented in the
balance sheet, income statement, statement of cash flow, and statement of stockbrokers equity.
As a publicly traded company, an analysis of the company’s financial statements is important for
both creditors and investors. Such an analysis allows creditors and investors to gauge conditions
for profitability and safety of their investments. In particular, a look at its liabilities and
contingencies allows investors and creditors to gauge its ability to remain stable in the face of
economic downturns and other financial hits that the company may face both in the short and
long term.
The data used in the assignment has been derived from the company’s financial
statements which are on the following pages.
Income Statement – page 56
Balance Sheet – Page 57
Statement of Stockbrokers Equity – 58
Statement of Cash Flows – 59

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Part 2: Liabilities
As of 2018, the company’s total liabilities were $116,909 million. The liabilities include
current liabilities amounting to $78,521 million, long term debt amounting to $30,045 million,
and deferred income taxes of $8,343 million (Wal-Mart, 2019).
The total liabilities represent an increase from the $112, 282 million liabilities recorded in
the previous year. This overall increase in total liabilities is mainly due to the increase in current
liabilities from $66,928 million to $78,521 million (Wal-Mart, 2019). This increase is mainly
because of an increase in the company’s inventory. However, the trend is worrying as it might
lead to difficulties in meeting short term obligations.
Part 3: Contingencies
The company has disclosed a number of contingencies that are likely to reduce its
profitability. These contingencies are mainly a result of various litigations that have been brought
against the company by various individuals and institutions in the countries that it operates in.
They include a case against ASDA store for equal value claims by its current and former female
employees. The store is a UK-based wholly owned subsidiary of the company thus any financial
statement from the case is going to be handled by Wal-Mart. Another one is FCPA (Foreign
Corrupt Practices Act) investigation by the Department of Justice. There are also a number of
cases that been brought against it by various counties and municipalities over the company’s
involvement in distribution of prescribed opium (Wal-Mart, 2019). If successful, Wal-Mart may
be forced to pay significant amounts of money to the individuals and institutions involved.
Even though Wal-Mart faces these contingencies, there is no money that has been set
aside for them under the liabilities section. This could mean that Wal-Mart does not think that

ANALYSIS OF WAL-MART’S FINANCIAL STATEMENTS 4
the occurrence of these contingencies will happen in the 2018 financial year. It could also mean
that its current contingencies do not have significant material effects on its profitability. As
stated in the notes, the contingencies that the company has a fairly accurate assessment of their
occurrence and cost involved have been included in its expenses.

ANALYSIS OF WAL-MART’S FINANCIAL STATEMENTS 5

References

Fortune 500 (2019). Results. Retrieved on 2 nd September, 2019 from
https://googleweblight.com/i?u=https://fortune.com/fortune500/search/&hl=en-KE
Wal-Mart (2019). 2018 SEC 10k Report. Retrieved on 2 nd September, 2019 from
https://www.sec.gov/Archives/edgar/data/104169/000010416918000028/wmtform10-
kx1312018.htm