Walmart Financial Statement and Financial Ratios Analysis

Walmart 2022 - Brief Company Summary

Walmart is a retail store (Walmart Stores) and wholesale outlet (Sam’s Club).  The company generates revenues through three main business segments, which are Walmart U.S., Walmart International, and Sam’s Club.  Specifically, Walmart operates supercenters, supermarkets, warehouse clubs, and eCommerce websites.  The main revenue generators from Walmart would include grocery products, including dry grocery products, deli and bakery, frozen foods, and alcoholic and nonalcoholic beverages.  In addition, secondary revenue generators are gasoline stations and tobacco sales.

From a financial perspective, as of February 2022, Walmart’s market capitalization is $382.7 billion.  The organization’s beta is .5.  A beta below 1.0 indicates that the company's stock is less risky as compared to the overall market.  Walmart’s current stock price is $137.99.  The organization’s current dividend yield is approximately 11.62%.  Finally, important competitors for the organization would be Target as well as Amazon.com (2/22).

Walmart Financial Report Sources

"Walmart 2021 Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by, Paul Borosky, MBA., doctoral candidate, and owner of Quality Business Plan.  In this summarized book, the author researched Walmart's 10k, Walmart's 2017 10k annual report, Walmart's 2021 10k annual report, Walmart's 2020 10k annual report, and Walmart's 2019 10k annual report as the basis for information gathering.  Once all Walmart's 10k annual statements were collected, the author then inserted Walmart's income statement information and Walmart balance sheet information into a customized financial template. 

 

 

Section 1: Walmart Income Statement Analyzed

In this section, I walk through a broad definition of what an income statement is and why it is important.  From this, I then discuss and define income statement line items, such as revenues, gross profits, etc. in detail.  After each line item is defined and discussed, I finally offer a summary analysis of Walmart's important income statement line item trends from 2017 to 2021, in most cases.

Revenue Growth:

Walmart ended 2017 with revenues of approximately $485 billion.  In the next four years, the organization will continually grow revenues.  This growth would result in revenues of $559 billion in 2021.  The organization’s growth rate ranged from 6.7% in 2021 to 1.6% in 2019.  This would be an average growth rate of 3.6%.  An important note to consider is that the firm had above-average growth from 2020 to 2021.  A possible reason for this growth would be pandemic-related.  As a result, future growth rates may not reach this elevated plateau, especially with competitive pressures from Target and Amazon.

Walmart Income Statement 2021
Column1	2021	2020	2019	2018	2017
Revenues	559,151	523,964	514,405	506,343	485,873
COGS	420,315	394,605	385,301	373,396	361,256
Gross Profit	138,836	129,359	129,104	132,947	124,617
SG&A	116,288	108,791	107,147	106,510	101,853
Depreciation	11,152	10,987	10,678	10,529	10,080
R & D	-	-	-	-	-
Other		-	-	-	-
Operating Expenses	536,603	503,396	492,448	479,906	463,109
EBIT	24,524	22,978	24,086	28,615	25,031
Other Income		-	-	-	-
Interest Expense	1,976	2,410	2,129	2,178	2,267
EBT	22,548	20,568	21,957	26,437	22,764
Taxes	6,858	4,915	4,281	4,600	6,204
Net Income	15,690	15,201	6,670	9,862	13,643
Tax Rate	30.4%	23.9%	19.5%	17.4%	27.3%

 

Walmart Balance Sheet Analyzed

For Walmart's balance sheet, I again go through each important line item from the balance sheet.  In reviewing each line item, I will define the balance sheet line item, such as cash, property, plant and equipment, and liabilities between 2017 to 2021.  Next, I then offer an analysis of Walmart's important balance sheet line item.

Cash: Walmart’s cash position in 2017 was $6.8 billion.  In the next year, the organization’s cash position would fall slightly to $6.7 billion.  Fortunately, in the next two years, the organization would enjoy a moderate cash growth ending in 2020 at $9.4 billion.  However, in 2021, the organization’s cash position would grow substantially, ending the year at $17.7 billion.

The substantial growth in the company’s cash position in 2021 may have been in response to the Covid-19 pandemic.  Similar to other multinational companies, Walmart may have taken out substantial debt to ensure the firm had liquid resources to sustain operations.  If this was the case, then the firm’s debt position should have increased substantially as well. 

Another possibility for the increased cash position would be the firm’s stringent reluctance to use short-term investments.  If this is the case, it’s not a great strategy.  A better strategy would be for the organization to identify specifically what their cash needs may be and divest the additional cash into short-term investments.

Walmart Summary Balance Sheet 2021
Column1	2021	2020	2019	2018	2017
Cash	17,741	9,465	7,722	6,756	6,867
Short Term Investment	-	-	-	-	-
Account Receivable	6,516	6,284	6,283	5,614	5,835
Inventory	44,949	44,435	44,269	43,783	43,046
Other	-		-	-	-
Current Assets	90,067	61,806	61,897	59,664	57,689
Net PPE	92,201	105,208	104,317	107,675	107,710
Goodwill	28,983	31,073	31,181	18,242	17,037
Other	-	-	-	-	-
Total Assets	252,496	236,495	219,295	204,522	198,825
Accounts Payable	49,141	46,973	47,060	46,092	41,433
Accrued Expense	37,966	22,296	22,159	22,122	20,654
Accrued Taxes	242	280	428	645	921
Notes Payable	3,115	5,362	5,225	5,257	1,099
LT Debt - Current	491	511	729	667	2,256
Other		-	-	-	-
Total Current Liabilities	92,645	77,790	77,477	78,521	66,928
LT Debt	41,194	43,714	50,203	36,825	42,018
Other		-	-	-	-
Total Liabilities	164,965	154,943	50,203	36,825	42,018
Common Stock	3,928	3,531	3,253	2,943	2,676
Treasury	-	-	-	-	-
Retained Earnings	88,763	83,943	80,785	85,107	89,354
Other	-	-	-	-	-
Total Equity	87,531	81,552	79,634	80,822	80,535
Total Equity & Liability	252,496	236,495	219,295	204,522	198,825

 

 

Walmart's Financial Ratio Summary

For this section, I have chosen several different financial ratios to review for Walmart from 2017 to 2021.  In reviewing each of Walmart's financial ratios, I first start with defining the financial ratio.  Next, I supply the financial formula for calculating the specific ratio.  Finally, I offer a brief analysis of Walmart's Important Financial ratios. 

Walmart's Current Ratio: 

Walmart’s current ratio ended in 2017 at .86.  The following year, the organization would reduce its current ratio to .76.  However, in the next three years, Walmart would increase the current ratio is 2021 to .97. 

For most organizations, a current ratio below 1.0 may be considered risky from the perspective of liquidity.  However, with industries and organizations that continually generate cash on a daily basis, having a current ratio of .8 or lower has become the norm in the last several years.  From this perspective, it seems like Walmart actually has a higher current ratio than would be typical for industry competitors.  From this, a better strategy may be for the organization to reduce its current ratio by investing in more stores or increasing its dividend payouts.

Walmart's Total Asset Turnover: 

Walmart’s total asset turnover in 2017 was 2.44.  In the next four years, the organization will continually decrease the total asset turnover ending 2021 at 2.21. 

Walmart's Debt Ratio: 

Walmart’s debt ratio for 2017 was 21.1%.  In the next two years, the organization’s debt ratio would slightly increase to 22.8%.  However, in the last two years, the organization would take steps to reduce the long-term debt ratio ending 2021 at 16.3%. 

The substantial reduction in their long-term debt ratio shows that the firm is restructuring its capital structure to include more equity in operations and growth as compared to debt.  This type of structure quite frankly confuses me.  A better strategy, in my humble opinion, would be for the organization to take on more debt, buy back stock, and invest in growth.