Case Study : Wal Mart And Its Operations

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Mr. Dewey, I hope had a joyous holiday and New Year. As a valued client, I am writing to inform you of a possible addition for your portfolio for 2006. I have been monitoring Wal-Mart Stores Inc. (Wal-Mart) and recently I conducted extensive analysis on the company’s financial performance. Throughout the following document, I will present the key pieces of information that I have gathered from my analysis to support my recommendation to purchase or not purchase shares of Wal-Mart. Then, based upon the information presented, you can best decide whether or not to include the equity in your portfolio. You will learn about the history of Wal-Mart and its operations, the number of locations and its competitors. From annual reports and 10-K filings, I will include factors for the company’s success, the competitive situation, as well as Wal-Mart’s strengths and weaknesses. The company overview provides a good backdrop to the quantitative data that is then presented for the retailing giant during 2004, 2005 and forecasted for 2006. The information will include Wal-Mart’s past financial performance during 2004 and 2005, as well as the associated ratios, and forecasted results for 2006 regarding potential financial operations, profitability or losses, as well as if the company will need to rely upon external borrowing. You will also receive the intrinsic value of Wal-Mart based upon the dividend discount model, assumptions to reach the stated conclusions and the required rate of
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