Capital Structure Analysis - Walmart Essay

4077 WordsSep 7, 200517 Pages
Introduction 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. The primary focus of Team C¡¦s analysis of Wal-Mart, Inc is its current and future financial condition. 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…show more content…
www.walmart.com The short-term goal is to reduce liability/increase cash, thereby increasing the underperforming ratios, and the long term goal is to continue its international expansion efforts while maintaining sales and profits. In order for management to make the most appropriate decision the potential negative consequences of the planned changes must also be analyzed. To meet company goals, potential changes in the following areas should be explored: cash and marketable securities, short-term financing, credit policies, and inventory management. Cash and Marketable Securities Cash and marketable securities are important current assets. A financial manager can review financial documentation to identify significant sources of cash and can forecast future sources and uses of cash. The company may also choose to purchase or sell securities in order to enhance its financial position. A review of the last three annual reports shows that company debt has increased due to the expansion efforts while sales have steadily increased at a rate of only 12%. Total current liabilities have increased by 37% and long term debt has
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