FINANCIAL ANALYSIS OF SEARS VS. WAL-MART
Table Content
Background Analysis------------------------------------------------ 3
Financial Ratio analysis--------------------------------------------- 4
Weighted Average Cost of Capital (WACC)--------------------- 12
Working Capital Management--------------------------------------20
Dividend Policy and Tax Treatment------------------------------- 23
Conclusion------------------------------------------------------------24
Background Analysis
Wal-Mart
Wal-Mart Stores, Inc., incorporated in 1969, is an international retailer. In the United States, the Company operated 1,568 discount stores, 1,258 Super centers, 525 SAM's CLUBs and 49 Neighborhood Markets as of January 31, 2003.
Wal-Mart's greatest advantage is having great bargaining power with suppliers to get the lowest price so they can pass it on to the customer. To further this, Wal-Mart is continuing to lower prices, offer newer and up to date products through their global suppliers' sourcing network.
Sears
In 1886 Sears began the R.W. Sears Watch Company in Minneapolis. Sears, Roebuck and Co was officially formed in 1893. Sears is a leading retailer of apparel, home and automotive products and services, with annual revenue of more than $40 billion.
English: Inside the Walmart (still branded as Wal-...
A protest in Utah against Wal-Mart
Wal-Mart de Chicoutimi.Sears operated 863 mall-based retail stores, most with co-located Sears Auto Centers, and an additional 1,200 retail locations including hardware, outlet, tire and battery stores as well as independently owned stores, primarily in smaller and rural markets.
The two retailers, Sears, Roebuck and Co. and Wal-Mart Stores, Inc., have a very similar value for return on equity in the recent fiscal years. We are using the past 5 years information to analyze the strategies and accounting policies for each company, and better understand the companies' performance and predict the companies' trend in the future for each firm. This case provides a good introduction regarding the combination of such information to create a powerful tool for financial statement analysis.
Profitability analysis
Exhibit 1-1 Comparison of profitability ratios
2002 2001 2000 1999 1998
SEARS WMT SEARS WMT SEARS WMT SEARS WMT SEARS WMT...