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    Review the financial statements for two years of Wal-Mart and another company in the same industry.

    Make a comparison of: revenues; cost of good sold; accounts receivable & accounts payable and inventory for two years and show trends for all five categories for each company.
    Discuss and interpret the changes over the three year period.
    Which company is the best performer and why?
    How is this information useful to you from a managerial perspective?
    Explain your reasoning and support with the numbers you have pulled out for the comparison above.
    Don't forget to comment on the interaction of the balance sheet and income statement.

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    Solution Preview

    I'd love to help with your questions. Let's look at each question.
    Review the financial statements for two years of Wal-Mart and another company in the same industry.
    Here is the link you will need:
    http://investors.walmartstores.com/phoenix.zhtml?c=112761&p=irol-sec
    The last 10-K is the 4th report listed, and we also want to look at the 8th one done, which is the 2011 10-K. The PDF format is usually the easiest to navigate.
    Now let's pick Target because they are a major competitor, so they're in the same industry and their financial statements are very well-organized.
    Here is their link:
    http://investors.target.com/phoenix.zhtml?c=65828&p=irol-sec
    We want #3 and #6.
    Annual reports are very long and intimidating, so we're going to go straight to where we need to be, so we can discuss each part of your analysis.
    Walmart pg. 54
    Target pg. 36
    Because their fiscal year-ends are different, the three year period for Walmart is 2012, 2011, 2010, and for Target is 2011, 2010, and 2009.

    The best way to handle this would be to discuss each component asked for in your posting.
    1. Make a comparison of revenues, COGS, A/R, A/P, and inventory for two years and show trends for all five categories for each company. Discuss the changes over the three year period.
    Comparison for two years:
    Revenues: Walmart's revenues increased sizably from 2011 to 2012, while Target's annual revenue only increased by a small amount. When evaluating revenues on a three year trend for Target, this pattern holds constant. From 2009 to 2010, revenues increased by $2,033 and from 2010 to 2011, total revenues increased by $2,475. When we look at Walmart, we notice much more significant increases on a three year trend. From 2010 to 2011, revenues increased by $13,764, and from 2011 to 2012, there was an increase totaling $25,101. We can therefore conclude that the revenue increase was more significant for Walmart, when compared to Target.
    COGS: Walmart's cost of sales increased in relation to their increases in revenues. This would be expected, as the cost of sales (COGS) would increase in proportion to revenues under the knowledge that it takes money to make money - the company must buy more materials and spend more in order to support increased revenues. We see very small increases in the cost of sales at Target, which also is in proportion to their much smaller increases in revenues. This holds constant on a ...

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