Wal-Mart Financial Analysis

Corporate Finance: Wal-Mart

Contents

Corporate Finance: Wal-Mart 1

1. Introduction 2

2. Success at Delivering Value to the Shareholders in the Last 5 Years 2

2.1 Growth in Earnings 2

2.2 Growth in Dividend Declared 3

3. Valuation of Equity 4

3.1 Net Asset Value (NAV) 5

3.2 Price / Earnings Ratio 5

3.3 Discounted Free Cash Flow 7

4. Reconciliation of Differences 8

4.1 Benefits and Costs of Using Net Assets Value 9

4.2 Benefits and Costs of Using Price Earnings Ratio 9

4.3 Benefits and Costs of Using Discounted Free Cash Flow 9

5. Conclusion 9

1. Introduction

The organization that I have chosen for the purpose of this corporate finance analysis is Wal-Mart. As is well known, Wal-Mart is the global market leader of the global retail industry and has been in operation for more than 100 years. The organization is listed primarily on the New York Stock Exchange where it has the market capitalization of 250.55 billion dollars and average trading volume of 6,075,000 shares (Yahoo Finance, 2013).

There is no doubt about the fact that the brand name of Wal-Mart both in the consumer market and among the corporates is extremely significant. The speculations on this name of Wal-Mart are high and inflated. The question however is whether the organization has actually been able to deliver value to the stakeholders of the organization in the last five years or not. This is precisely what this report will be doing. Through this, the success of Wal-Mart at delivering value to the shareholders, the valuation of the equity of the organization through different methods and finally the evaluation of the different methods will be done. For this purpose, the time period taken into consideration is the five years from 2008 to 2...

... middle of paper ...

...ow

The benefit of using the discounted cash flow method is that it focuses on the present value of the cash flows however the estimates of the cash flows can be different from the actual reality in the future and therefore the overall valuation may not be that reliable.

5. Conclusion

Conclusively, from the valuation and financial analysis of Wal-Mart, it has been seen that the organization is performing well and has been able to deliver good value to its shareholders.

References

1. Lomax, A. (2010). Has Wal-Mart Hit the Wall?, Available at http://www.fool.com/investing/value/2010/02/18/has-wal-mart-hit-the-wall.aspx#.UrabyvRHLkt

2. Olivier et al. (2000). Principles of Finance Management, 1st Ed. SA: Juta and Co.

4. Rappaport, A. (2006). Ten Ways to Create Shareholder Value, HBR.

5. Yahoo Finance. (2012). Wal-Mart Stock Price History, Yahoo Finance.