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Financial Analysis: Investing in Companies

Assume you are a savvy financial analyst researching companies in which to invest.
Select a U.S. publically-traded company you think might be a good investment and perform a financial analysis. Your analysis should include the following:
- Company Overview. Conduct research and describe the company, its operations, locations, markets, and lines of business. Collect financial statements for the past three (3) years, fiscal or calendar (please insert these in the appendix). These financial statements must include at least the income statement and the balance sheet.
- Evaluate the company's vulnerability to current financial threats such as a recession, higher interest rates, and global competition.
- Financial Performance. Based on the financial trends of the company, predict how these trends will impact financial performance in future periods. Explain your rationale for this prediction.
- Stock Price Analysis. Given the performance of the stock in the periods presented on the company's financial statements, discuss how the stock is likely to perform in the future, what type of investor would be drawn to this stock, and make a recommendation to management to improve stock performance.

Submit analysis in which you:
1. Provide a detailed overview of a U.S. publicly traded company. This should be one to two (1-2) pages.
2. Evaluate the company's vulnerability to current financial threats such as a recession, higher interest rates, and global competition.
3. Based on the financial trends of the company, predict how these trends will impact financial performance in future periods. Explain your rationale for this prediction.
4. Cite at least five (5) quality references.

Solution Preview

Please see the attachment for the balance sheet/Income statement.

Submit analysis in the form of a 6-8 page paper in which:

1. Provide a detailed overview of a U.S. publicly traded company. This should be one to two (1-2) pages.

The company selected is Wal-Mart. It is a US based multinational retail corporation that has a chain of discount department stores and warehouse stores. More than 200 million customers visit their 10,700 stores in 27 countries and e-commerce websites in 10 countries. Its 2013 fiscal sales were $466 billion. It employs 2.2 million employees all over the world. Its total retail units are 10,773, Wal-Mart US is 4,005 units, Sam's Club is 620 and Wal-Mart International is 6, 149. Wal-Mart is the world's largest corporation when ranked by sales revenues. The company has a fifteen member Board of Directors which is chaired by Robson Walton the eldest son of Sam Walton. The main competitors of Wal-Mart are other departmental stores such as Target, Kmart, ShopKo and Meijer. In every country where Wal-Mart has a presence, the other department stores in those countries are the main competitors. It has also faced severe competition in some countries. For example, the competition in Germany was so fierce that Wal-Mart had to withdraw from that country. The mission of Wal-Mart is to help people around the world save money and live better. Studies show that Wal-Mart customers benefit from lower costs. Food at home prices have also declined where Wal-Mart stores have commenced operations (1). The poorest segment of the population benefits the most from the opening of Wal-Mart. Wal-Mart is a market leader which has competitive advantage. Its strategy of low cost leadership enables Wal-Mart to offer products at lower price international strategy. Wal-Mart has got great opportunities for expansion in the emerging markets. It has high concentration on grocery and food products which enables Wal-Mart to get economies in global sourcing of its products. Wal-Mart growth is assured because it has entered internet retailing. Wal-Mart has also taken steps to increase its online presence in a big way. It has recruited some of the best internet talent last year. The team is already working to make Wal-Mart website a hit with customers. It is also investing in social gifting market. Wal-Mart's search engine is much better than those of online competitions. it is also promoting same day shopping in a big way. Wal-Mart is also building up its mobile application customer based.

2. Evaluate the company's vulnerability to current financial threats such as a recession, higher interest rates, and global competition.

Wal-Mart's vulnerability to current financial threats is ...

Solution Summary

The response provides you a structured explanation of investing in a chain of discount department stores. It also gives you the relevant references.

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