Overview of Walmart Financial Acticities

MAUREEN CARSON OPERATING ACTIVITIES 1

Overview of Operating Activities for Wal-Mart Stores, Inc.

Maureen Seitzinger-Carson

Lasell University

MGMT 704.B Daniel Borden

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The operating activities of Wal-Mart Stores, Inc. will be reviewed from the two most recent year-end financial statements. The Income Statement, Balance Sheet and Statement of Cash Flows will be assessed with the elements most affected by operating activities emphasized. Exhibits for each will be displayed summarizing specific information. Extraordinary gains and losses will be examined, as well as any cumulative effects of accounting changes.

Accounting methods used, revenues, accounts receivable and inventory will briefly be described. Last in, first out (LIFO) reserves and liquidations will be defined and briefly explained. Trends will be analyzed concerning operating results and ratios with a preliminary assessment made. The implications of specific trends will be briefly discussed. The overall operating effectiveness and operating efficiency will be described; documenting the accounting ratios to support these conclusions.

The following shows amounts for each category from Wal-Marts Income Statement that will be used in the following graphs:

2010 2011

Sales Revenue 421.85B 408.08B

Costs of goods sold 315.29B 304.44B

Operating Expenses 396.31B 384.08B

Income Taxes 7.58B 7.16B

Net Income (loss) 16.39B 14.37B

Earnings Per Share 4.48 3.72

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The following shows graph for: Revenues, Net Income and Earnings Per Share:

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The following shows graph for: operating expenses (http://www.wikinvest.com/stock/Wal-Mart_%28WMT%29/Data/Total_Operating_Expenses) $92.19 Billion for 2011

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Extraordinary losses were shown for 1/31/2011 in the amount of $1.0 Billion, and 1/31/2010 in the amount of $545 Million related to net investment hedges of Wal-Marts operations in the United Kingdom and Japan. The losses were a result of currency translation adjustments from currency changes in these countries. Extraordinary gains were shown when "Wal-Mart reclassified $14 Million in 2011 and $83 Million in 2010 from accumulated other comprehensive income (loss) to earnings to offset currency translation losses on the remeasurement of non-US-denominated debt." (www.walmartstores.com) Wal-Mart had income from discontinued operations during the fourth quarter of fiscal 2011 when a suit was settled with the Internal Revenue Service, which resulted in the reclassification of the deduction as an ordinary loss. This income was in the amount of $1.7 Billion and related to the fiscal 2007 disposition of its German operations. Cumulative effects of accounting changes are shown for 2010 as a result of a new financial system designed for the United States, Canada and Puerto Rico in the amount of $(52) Million in sales adjustment.

A comparison of cash flow from operating activities to the income from continuing operations for Wal-Mart for the years 2010 and 2011 shows results: (For the amount they differ):

* 2011= $(1,034) Million

* 2010= $79 Million

The increase from continuing operations for 2010 is a result of increased productivity and improved inventory management. The loss shown for 2011 is a result of discontinued operations from the suit settled with the Internal Revenue Service.

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The following summarizes Wal-Marts Balance Sheets for selected items:

2011 2010

Balance of accounts receivable minus debts 1.8%B 1.9%B

Accounts receivable (net) 5,089 4,144

Inventories 36,318 32,713

Income Taxes payable 7.58B 7.16B

Deferred income taxes 6.68B 5.51B

The accounting method used to compute allowance for bad debts as a percentage of ending accounts