The annual reports of Wal-Mart and Target are provided free of charge via walmart.com and target.com. Upon inspection, the Wal-Mart and target reports include meaningful financial statements, including the Statement of Owners Equity, Income Statement, and Balance Sheet. These statements were obtained through 10-K statements available on walmart.com and target.com.
In comparing the statements of these companies, Wal-Mart and Target both provide multi-step Statements of Operations, which include the current and previous 2 years financial information.
Selected Data from Statement of Operations
(Dollars in Millions)
Wal-Mart (2002) Wal-Mart (2001) Wal-Mart (2002) Wal-Mart (2001)
Income from Operations264.1245.7193.9157.0
A review of core operating data shows that annual sales improved by 399 million and 98.2 million for Wal-Mart and Target, respectively. This resulted in Wal-Mart improving net income by 36.1%, and Target producing a 21.8% gain over the previous year. While Wal-Mart would appear to have improved dramatically, further review reveals that this improvement is due to a large reduction in income taxes, caused by a corresponding loss in business segment walmart.com.
Because this segment is expected to reduce its losses in 2003, look for Wal-Mart to have a more modest improvement in net income.
Consistent with GAAP, both organizations have balanced consolidated balance sheets as follows:
Selected Data from Consolidated Balance Sheets
(Dollars in millions)
Wal-Mart (2002) Target (2001) Wal-Mart (2002) Target (2001)
L+Liabilities 1,967.71,735.1 $1237.61,229.4
SEStockholder's Equity 1,027.7888.1 $1030.6949.9
Total Liabilities and Shareholder Equity$2995.4$2623.2$2,268.2$2,179.3
According to the Statement of Cash Flows, Wal-Mart and Target have produced significantly larger net cash flows from Operations than net income. Target has improved cash flows from operations through effective reduction of A/P, while Wal-Mart utilized impairment and the loss on walmart.com to improve net cash flows. In 2001, Target appears to have expanded, and in 2002 the bills...