Question

The Analysis of Walmart's recent Financial Statements

Answer 1

Walmart’s recent financial statements pertain to Q1 FY20.

An analysis of the same is provided below:

The company’s total revenue stood at $123.9 billion for Q1 FY20 and this translated into a year on year increase of 1.0% and in absolute terms $1.2 billion. It’s operating income declined by 4.1% on a year on year basis from $5.2 billion in Q1 FY19 to $4.9 billion in Q1 FY20. The company’s consolidated net income, however, improved by 80% and this was mainly attributed to decline in other losses for the company during the quarter.

The company’s operating cash flow and free cash flow also showed a year on year declines. Walmart’s operating cash flow stood at $3.6 billion for Q1 FY20 and this was a decline of around 30% from the year ago quarter. Walmart’s free cash flow also declined to $1.4 billion for Q1 FY20 and this was a decline of around 59%. This was mostly due to increased levels of capex by the company.

Ratio and number analysis are presented in the table below:

	Q1 FY20	Q1 FY19	Change
Gross profit rate	24.30%	24.57%	-27 basis points
Operating expenses as percentage of net sales	21.10%	21.34%	-14 basis points
Debt to total capitalization	45.90%	53.80%	+790 basis points
Return on Assets	4.00%	4.80%	-80 basis points
Return on Investments	14.50%	13.90%	+60 basis points