Walmart Accounting Analysis

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Accounting Analysis

The purpose of this section is to evaluate the degree to which Wal-Mart’s accounting captures its true business practices. Specifically, this section will examine places where Wal-Mart has accounting flexibility. Additionally, this section will evaluate the appropriateness of Wal-Mart’s accounting policies and estimating techniques. Together, these provide an indication of the credibility behind Wal-Mart’s numbers.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal
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After much analysis of Wal-Mart’s annual report, it was found that the company uses a financial measure, free cash flow, which is considered a non-GAAP financial measure under the SEC’s rules. Free cash flow measures the ability to generate additional cash from business operations and therefore is believed to be an important financial measure to evaluate the business’ financial performance. As stated in the MD&A section of Wal-Mart’s annual report, “Free cash flow should be considered in addition to, rather than as a substitute for, income from continuing operations as a measure of our performance and net cash provided by operating activities as a measure of our liquidity.” There are several methods in calculating a company’s free cash flow; Wal-Mart views this measure as supplemental information to the firm’s entire statement of cash flows.
I feel as though the choice to use the measure of free cash flow may seem deceiving and perhaps mislead readers of Wal-Mart’s annual report. Wal-Mart’s free cash flow does not represent the actual cash available because the measure does not deduct the payments for debt and other contractual obligations or payments made for business acquisitions

Assess Accounting Flexibility
Accounting Flexibility: high level
Summary of Critical Accounting Policies
Management strives to report the financial results of the company in a clear and understandable manner, although in some cases
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