The following table gives abbreviated balance sheets and income statements for Walmart. At the end of fiscal 2017, Walmart had 3,060 million shares outstanding with a share price of $146. The company's weighted-average cost of capital was about 5%. Assume a tax rate of 35%. Balance Sheet (figures in $ millions) End of Year Start of Year Assets Current assets: Cash and marketable securities $ 6,956 $ 7,067 Accounts receivable 5,814 6,035 Inventories 43,983 43,246 Other current assets 3,711 2,141 Total current assets $ 60,464 $ 58,489 Fixed assets: Net fixed assets $ 115,018 $ 114,378 Other long-term assets 30,240 27,158 Total assets $ 205,722 $ 200,025 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 46,292 $ 41,633 Other current liabilities 32,629 25,695 Total current liabilities $ 78,921 $ 67,328 Long-term debt 37,025 42,218 Other long-term liabilities 11,507 12,281 Total liabilities $ 127,453 $ 121,827 Total shareholders' equity 78,269 78,198 Total liabilities and shareholders’ equity $ 205,722 $ 200,025 Income Statement (figures in $ millions) Net sales $ 500,543 $ 486,073 Cost of goods sold 373,596 361,456 Selling, general, and administrative expenses 96,181 91,973 Depreciation 10,729 10,280 Earnings before interest and taxes (EBIT) $ 20,037 $ 22,364 Interest expense 2,378 2,467 Taxable income $ 17,659 $ 19,897 Tax 4,600 6,964 Net income $ 13,059 $ 12,933 Dividends 6,324 6,895 Addition to retained earnings $ 6,735 $ 6,038 a. Calculate the market value added. (Do not round intermediate calculations. Enter your answer in millions rounded to nearest whole number.) b. Calculate the market-to-book ratio. (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Calculate the economic value added. (Do not round intermediate calculations. Enter your answer in millions rounded to nearest whole number.) d. Calculate the return on start-of-the-year capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

The following table gives abbreviated balance sheets and income statements for Walmart. At the end of fiscal 2017, Walmart had 3,060 million shares outstanding with a share price of $146. The company's weighted-average cost of capital was about 5%. Assume a tax rate of 35%. Balance Sheet (figures in $ millions) End of Year Start of Year Assets Current assets: Cash and marketable securities $ 6,956 $ 7,067 Accounts receivable 5,814 6,035 Inventories 43,983 43,246 Other current assets 3,711 2,141 Total current assets $ 60,464 $ 58,489 Fixed assets: Net fixed assets $ 115,018 $ 114,378 Other long-term assets 30,240 27,158 Total assets $ 205,722 $ 200,025 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 46,292 $ 41,633 Other current liabilities 32,629 25,695 Total current liabilities $ 78,921 $ 67,328 Long-term debt 37,025 42,218 Other long-term liabilities 11,507 12,281 Total liabilities $ 127,453 $ 121,827 Total shareholders' equity 78,269 78,198 Total liabilities and shareholders’ equity $ 205,722 $ 200,025 Income Statement (figures in $ millions) Net sales $ 500,543 $ 486,073 Cost of goods sold 373,596 361,456 Selling, general, and administrative expenses 96,181 91,973 Depreciation 10,729 10,280 Earnings before interest and taxes (EBIT) $ 20,037 $ 22,364 Interest expense 2,378 2,467 Taxable income $ 17,659 $ 19,897 Tax 4,600 6,964 Net income $ 13,059 $ 12,933 Dividends 6,324 6,895 Addition to retained earnings $ 6,735 $ 6,038 a. Calculate the market value added. (Do not round intermediate calculations. Enter your answer in millions rounded to nearest whole number.) b. Calculate the market-to-book ratio. (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Calculate the economic value added. (Do not round intermediate calculations. Enter your answer in millions rounded to nearest whole number.) d. Calculate the return on start-of-the-year capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 18P

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Question

Balance Sheet (figures in $ millions)
	End of Year		Start of Year
Assets
Current assets:
Cash and marketable securities	$	6,956		$	7,067
Accounts receivable		5,814			6,035
Inventories		43,983			43,246
Other current assets		3,711			2,141
Total current assets	$	60,464		$	58,489
Fixed assets:
Net fixed assets	$	115,018		$	114,378
Other long-term assets		30,240			27,158
Total assets	$	205,722		$	200,025
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	46,292		$	41,633
Other current liabilities		32,629			25,695
Total current liabilities	$	78,921		$	67,328
Long-term debt		37,025			42,218
Other long-term liabilities		11,507			12,281
Total liabilities	$	127,453		$	121,827
Total shareholders' equity		78,269			78,198
Total liabilities and shareholders’ equity	$	205,722		$	200,025

Income Statement (figures in $ millions)
Net sales	$	500,543		$	486,073
Cost of goods sold		373,596			361,456
Selling, general, and administrative expenses		96,181			91,973
Depreciation		10,729			10,280
Earnings before interest and taxes (EBIT)	$	20,037		$	22,364
Interest expense		2,378			2,467
Taxable income	$	17,659		$	19,897
Tax		4,600			6,964
Net income	$	13,059		$	12,933
Dividends		6,324			6,895
Addition to retained earnings	$	6,735		$	6,038

a. Calculate the market value added. (Do not round intermediate calculations. Enter your answer in millions rounded to nearest whole number.)

b. Calculate the market-to-book ratio. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

c. Calculate the economic value added. (Do not round intermediate calculations. Enter your answer in millions rounded to nearest whole number.)

d. Calculate the return on start-of-the-year capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

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