Prepare a financial plan for the Fortune 500 Company selected in week two. Describe the organization, including the type of business. Cr
Prepare a financial plan for the Fortune 500 Company selected in week two.
Describe the organization, including the type of business.
Create the business case.
- Determine why funding is needed for the company.
- Determine the sources of funding. Consider self-funding, borrowing, loans, equity, venture capital, etc.
- Evaluate the requirements of each of the funding sources that you plan to use.
- Analyze the risks that are associated with each funding source.
- Decide which sources are the best fit for your company based on the requirements of each. Justify your decision.
- Estimate the cost of capital for both short-term and long-term funding sources. Research current estimated APRs for your selected sources of funding. Create a table or chart to display this information.
Estimate direct costs, including capital, marketing, labor, equipment, and inventory/supply costs.
Prepare a budget that includes starting balances, monthly costs, loan/investment payments, cash flow projections, and required revenue.
Create a profit-and-loss statement for a 3-year period. Provide a revenue forecast, stating realistic assumptions, such as growth per year, in your projections.
Cite references to support your assignment.
Format your citations according to APA guidelines.
INVESTOR PRESENTATION
David Leonard
FIN/571
University of Phoenix
Overview
Company intro and ticker
Cash flow from operations
Price-to-earnings ratio
Stock dividends and the yield
Earnings per share ratio
Revenue estimates for the next 12 months
Revenue from previous three years
Statement of cash flows and identification of net cash from operating, investing, and financing over the last three years
Average trade volume
Current stock price, 52 week high, and 1-year estimated stock price
Analysts’ recommendations for the stock (buy, sell, hold)
Market cap
WALMART
Walmart is a global retail firm based in the United States that owns and manages a series of hypermarkets.
The Company provides a wide range of products and services at daily affordable costs.
The company was founded in 1962 by Sam Walton (Elhindwan & Nobanee, 2020).
According to fortune 500, Walmart is the world's largest firm by revenue.
As of 2021, the company had over 2,200,500 employees.
Walmart Inc., based in Bentonville, Arkansas, is an American multinational retail firm that runs a network of hypermarkets, cheap department stores, and grocery shops across the United States. Sam Walton launched the corporation in neighboring Rogers, Arkansas in 1962, and it was incorporated on October 31, 1969, under the Delaware General Corporation Law. The Company provides a wide range of products and services at daily affordable costs. Walmart U.S., Walmart International, and Sam's Club are the company's three main sectors. Walmart has 10,593 shops and clubs in 24 countries as of January 31, 2022, operating under 48 distinct names. In 1972, Walmart went public on the New York Stock Exchange. It had become the most profitable retailer in the United States by 1988, and the top in terms of sales by October 1989. According to the Fortune Global 500, Walmart is the world's biggest business by sales, with $548.743 billion.
3
CASH FLOW FROM OPERATIONS
Walmart cash flow from operations for the quarter ending January 31, 2022 was $16.291B.
Walmart annual cash flow from operations for 2021 was $36.075B, a 42.83% increase from 2020.
Walmart annual cash flow from operations for 2020 was $25.256B, a 8.9% decline from 2019.
Walmart annual cash flow from operations for 2019 was $27.654B, a 2.05% decline from 2018.
Few would have expected Walmart's (WMT 1.78 percent ) stock's trajectory two years ago. At the time, the firm had bolstered its omnichannel footprint in order to compete more effectively with Amazon (AMZN 2.56 percent ), Costco (COST 1.71 percent ), and other competitors. COVID-19-related shutdowns, on the other hand, provided unanticipated advantages to the firm. As a result, cash flow in 2021 will be higher. It benefited from the demand for consumer basics and the closures of many small rivals, in addition to having the infrastructure to facilitate online orders and pickups. Walmart stayed open in most areas when the virus broke out and civilizations throughout the globe went into lockdown. Walmart's sales increased since it was able to provide fundamental necessities while also servicing online and omnichannel clients who were hesitant to enter a store.
4
PRICE-TO-EARNINGS RATIO
Walmart's PE ratio was 22.23 as of March 27, 2022.
As of 2021-10-31, Walmart’s PE ratio was 51.83
Walmart's highest PE Ratio in the last 13 years was 60.67,10.56 being the lowest score. The average was 16.13.
The price to earnings ratio (PE Ratio) is a measure of a company's share price in relation to its yearly net income per share. The current investor demand for a company's stock is represented by the PE ratio. Investors expect future profits growth, therefore a high PE ratio often suggests greater demand. The PE ratio is expressed in years, which may be translated as the number of years it will take for profits to cover the purchase price. The PE ratio aids investors in determining a stock's market value in relation to its profits. In a nutshell, the PE ratio indicates how much the market is ready to pay for a company now based on its previous or projected profits. A high PE indicates that a stock's price is high in comparison to its profits and may be overpriced. A low PE, on the other hand, may imply that the present stock price is cheap in comparison to earnings.
5
STOCK DIVIDENDS
The annual cash dividend is 2.20 per share.
This is a 2% increase from the previous year.
Walmart has had an increase in its annual cash dividend from March 1974 (Zhongming et al., 2020).
Walmart Inc.'s (NYSE: WMT) Board of Directors has authorized a $2.20 per share annual cash dividend for fiscal year 2022, up almost 2% from the $2.16 per share given the previous fiscal year. The annual dividend of $2.20 per share for fiscal year 2022 will be paid in four quarterly payments of $0.55 per share. EPS is expected to increase by 38.1 percent in the next year. If the dividend continues on its current path, the payout ratio is expected to reach 33 percent, which is within the range where the firm feels confident in the dividend's long-term viability. The corporation has a long history of providing consistent dividends with minimal variation. In the previous ten years, the first yearly payment was US$1.46 in 2012, while the most recent fiscal year payment was US$2.24. Over that period, it has grown its dividends at a rate of 4.4 percent every year.
6
Earnings per share ratio
Walmart's earnings per share (EPS) for the quarter ended January 31, 2022 was $1.28.
Walmart's EPS for the year ended January 31, 2022 was $4.88, up 2.74 percent from the previous year.
Walmart's annual EPS for 2022 was $4.87, up 2.53% from 2021.
Walmart's yearly EPS for 2021 was $4.75, down 8.48 percent from 2020.
Walmart's yearly EPS for 2020 was $5.19, up 129.65% from 2019.
A company's net profits or losses attributable to common shareholders per diluted share base, which includes all convertible securities and debt, options and warrants, may be characterized as earnings per share. Walmart's earnings per share (EPS) for the quarter ended January 31, 2022 was $1.28. Walmart has an Earnings Per Share of 4.87 times, according to the company's filing. This is 183.14 percent more than the Consumer Defensive industry and 83.08 percent more than the Discount Stores industry. The firm's profits per share are 56.09 percent lower than the earnings per share of all US equities. One of the most extensively used and acknowledged techniques of equity analysis is stock peer comparison. It compares Walmart's direct and indirect competitors' earnings per share to identify inexpensive firms with comparable characteristics or stocks that might be a smart addition to a portfolio. Walmart's relative valuation, which is a way of assessing Walmart by comparing value measures of comparable firms, might also benefit from peer study.
7
Revenue estimates
Wal-Mart shares surged 4 percent on March to settle at $138.88, despite a dip in the overall market as a result of escalating tensions along the Russia-Ukraine border. The business reaffirmed its guidance, which was higher than the average of analyst expectations. The firm expects to see an increase in the number of consumers visiting its shops for presents and groceries over the next 12 months, which will help it exceed Wall Street's projections for sales growth despite supply chain constraints and increased expenses. Walmart is pursuing new income sources as it expands its focus outside retail, which is projected to improve its revenue in the near future.
8
Revenue from the previous 3 years
Walmart reported $152.871 billion in sales for the quarter ended January 31, 2022, up 0.52 percent year over year.
Walmart's yearly sales in 2021 was $559.151 billion, up 6.72 percent from the previous year.
Walmart's annual sales in 2020 was $523.964 billion dollars, up 1.86 percent from 2019.
The amount of money a firm gets from its consumers in return for the sale of products or services is known as revenue. On an income statement, revenue is the top line item from which all expenditures and expenses are removed to arrive at net income. Walmart reported $152.871 billion in sales for the quarter ended January 31, 2022, up 0.52 percent year over year. Walmart's yearly sales in 2021 was $559.151 billion, up 6.72 percent from the previous year. When the epidemic brought millions of people online in 2020, Walmart's e-commerce revenues skyrocketed. The American retailer adapted quickly, creating software and skills to service consumers across its shops and digital platforms, which it now sells to other retailers.
9
Statement of cash flows
Net Cash flow from Operations for 2019, 2020 and 2021 were 27.75B, 25.26B and 36.07B.
Net Cash flow from investing activities for 2019, 2020 and 2021 were (24.04B), (9.13B) and (11.92B) (Batista, 2021).
Net Cash flow from financing for 2019, 2020 and 2021 were (2.54 B), (14.3B) and (16.12B).
The amount of money a firm gets in through its continuous, regular business operations, such as producing and selling things or providing a service to consumers, is referred to as cash flow from operational activities (CFO). On a company's cash flow statement, it is the first part. Walmart's operational cash flow for the twelve months ended January 31, 2022 was $67.646 billion, down 8.72 percent year over year. Walmart's yearly cash flow from operational operations was $36.074 billion in 2021, up 42.84 percent from 2020. Walmart's annual cash flow from operational operations was $25.255 billion in 2020, down 9% from 2019.Walmart's annual cash flow from operations in 2019 was $27.753 billion, down 2.06% from 2018.
10
Average trade volume
Walmart's average daily volume is 8.216 million.
The amount of shares traded during the day
The average daily trading volume (ADTV) of a stock is the average number of shares traded in a single day. The average daily volume may be calculated by averaging the number of shares traded each day over a period of days. Because high or low trading volume attracts various sorts of traders and investors, the average daily trading volume is an essential measure. Many traders and investors prefer greater average daily trading volume versus low trading volume since it is simpler to enter and exit positions with higher volume. Because low-volume assets have fewer buyers and sellers, it may be more difficult to enter or leave at the right price. When the average daily trading volume (ADTV) rapidly rises or falls, it indicates a significant change in how people value or evaluate the asset. Walmart's average daily volume is 8.216 million.
11
Current stock price, 52-week high, and 1-year estimated stock price
Current Stock Price: $146.00
52 Week High: $157.57
The average price target is $166.00
A high forecast of $190.00
A low forecast of $136.00
The most trustworthy measure of a security's present value is the most recent selling price of a stock, currency, commodity, or precious metal that is traded on an exchange. The current stock price at Walmart is $146.00. The 52-week high/low is a technical indicator that represents the highest and lowest price at which a securities has traded over the course of a year. The 52-week high/low is calculated using the security's daily closing price. The 52-week high for Walmart is $157.57. A price target is the level at which an analyst feels a company is reasonably priced in comparison to its predicted and previous profits. When an analyst increases a company's price target, they usually anticipate the stock price to grow as well. The average price objective at Walmart is $166.
12
Analysts’ recommendations for the stock (buy, sell, hold)
Walmart Inc. has a consensus price target of 166.00, with a high estimate of 190.00 and a low estimate of 136.00.
This rating has been intact since February.
The current consensus among investment analysts surveyed is to BUY Walmart Inc. stock.
A firm with a hold rating is likely to perform at the same level as similar companies or in line with the market in general. Underperform: A rating implying that a stock's return will be somewhat lower than the overall stock market performance. Analyst recommendations are suggestions and advice offered to customers by financial analysts and investment experts on which assets to invest in and which assets to avoid. A firm with a hold recommendation is predicted to perform in line with the market or at a similar rate to similar companies. This rating is better than sell but worse than buy, indicating that investors holding long positions should not sell but should not buy. The current consensus among investment analysts surveyed is to purchase Walmart Inc. shares. Since March, when it was unaltered from a buy rating, its rating has been stable.
13
Market cap for the company
Market cap: $401.75 Billion
Rank: 16th
Country: USA
Share price: $146
Walmart has a market capitalization of $401.75 billion as of March 2022. According to statistics, Walmart is the world's 16th most valuable corporation by market capitalization. The entire market value of a publicly traded business's outstanding shares, also known as market capitalization, is widely used to determine how much a firm is worth. Walmart Inc. is a multinational retail corporation based in the United States that controls a significant portion of the market. Walmart is ranked first in the Fortune Global 500 ranking of the world's best-selling firms. Walmart's current revenue (TTM) is $572.75 billion, according to the company's most recent financial reports. The company's sales in 2021 was $571.96 billion dollars, up from $548.74 billion dollars in 2020. The revenue is the total amount of income that a company generates by the sale of goods or services. Unlike with the earnings no expenses are subtracted.
14
References
Elhindwan, A. A., & Nobanee, H. (2020). Working Capital Management Ratios of Walmart. Ratio, 2019(2018), 2017.
Zhongming, Z., Linong, L., Xiaona, Y., Wangqiang, Z., & Wei, L. (2020). Walmart sets goal to become a regenerative company.
Batista, R. A. F. (2021). Equity research-Walmart Inc (Doctoral dissertation, Instituto Superior de Economia e Gestão).
,
1
3
Wk-4 Shareholder Analysis
David Leonard
FIN/570
University of Phoenix
15 April 2022
Economic conditions relate to the current state of a region's or country's economy at a certain point in time. These economic conditions change with time, along with the business and economic cycles. Generally, when an economy is growing, economic conditions are considered favorable; however, these conditions are deemed hostile and unfavorable when the economy is contracting. Economic conditions such as labor, unemployment, monetary policies, and inflation have a significant impact on business and influence the driving force of a firm. Despite its size, a company such as Walmart is not immune to the effects of these economic conditions.
Evaluate economic conditions that influence company performance. Consider political, environmental, currency (money), global economics, and government influences on economic conditions.
Being one of the largest corporations globally, Walmart is heavily influenced by political affairs. Walmart has gradually increased the amount of money on lobbying in the last two decades. Since 2000, the organization's lobbying expenses have risen from $2 million to $19 million per year. As we all know, Walmart is a well-known brand around the world. According to estimates, the company's stores in various locations across the globe serve 250 million people each year (Hunt, Watts & Bryant, 2020). Because of its size, a stable political environment is essential for executing different business operations.
For Walmart, stable economic conditions are crucial for its growth and well-being. The company has a culture of providing low-priced products. When a country’s economic conditions change, Walmart is usually forced to adjust its prices to ensure it remains profitable and running. Walmart is well-known for its positive work atmosphere and commitment to its employees. Walmart made the decision to raise the minimum wage of its employees to $9 per hour in 2015 in order to boost its reputation. This, however, had a partial impact on its overall profitability since a good percentage of the profits were channeled to salaries (Martínez, Galván & Alam, 2017). Recently, Walmart also announced plans to promote more than 240,000 of its employees, which would have had a significant influence on the company's sales. Walmart is also heavily influenced by fluctuations in currency. Changes in interest rates and market value are among the most significant sources of market risk. Government and legal factors also impact Walmart and influence its performance. Walmart, as a global corporation, is required to comply with all relevant international rules and regulations, including the World Trade Organization. Most of these laws are related to employment and labor regulations, labor laws, data protection regulations, and health and safety regulations.
Compare market conditions with the company's performance for 2017. Conclude how the year's market conditions influenced the company's performance, such as interest rates, Federal Reserve Bank monetary policy changes, or other market conditions relevant to the company you selected.
Many corporations, including Wal-Mart, benefited from the favorable economic conditions in 2017. The Federal Reserve Bank's reduced interest rate enabled firms to borrow more money to fuel their investments and expand operations. The stable political situation in the United States and throughout the globe provided a favorable commercial environment for Wal-Mart to thrive (Xin et al., 2017). Emerging economies raised disposable incomes, allowing Wal-Mart to have excellent company sales and profitability, improving overall financial performance. In 2017 alone, Walmart made approximately $124.7 billion in profit, an increase from $121.2 billion in 2016. The company also had a net income of $3033 million in 2017 and a current ratio of 0.81, higher than the industry average of 0.5. In the same year, Walmart also took advantage of its massive store footprint for easy online returns by partnering with Google on voice shopping. Furthermore, economic and legal aspects were favorable to the company.
Analyze year-over-year performance from 2016 and 2017. In your conclusions, consider key metrics or ratios such as trailing PE ratio, forward PE ratio, price to book, return on assets, and return on equity.
Walmart's P/E ratio was 14.26 in 2016 and 18.01 in 2017, indicating that investors expected the company to expand and were ready to pay a higher share price.
In 2016, the company’s P/BV ratio was 2.45, while in 2017, it was 3.09. A greater ratio suggests that the company's future ROA is likely to be higher.
In 2016, the company’s ROA was 5.5558, while in 2017, it was 7.1887. An increase in its ROA indicated that the corporation was making enough money from its assets.
In 2016, Walmart’s ROE was 14.0359, while in 2017, it was 18.7476. An increase in the company’s ROE indicated that the company's efficiency in generating profits had improved.
Since Walmart’s P/E, Mart's P/BV, ROA, and ROE ratios all increased, it's clear that 2017 was a fruitful year, and the company performed quite well. This was particularly motivated by favorable economic conditions, which led to Walmart's outstanding performance and development.
Conclusion
Most profitable businesses are in operation for one purpose only- to maximize their revenue. However, their success is highly dependent on the external economic conditions that are way beyond their control. These external factors revolve around politics, the economy, legislation, and technology and have a substantial influence on a company's performance. Therefore, these conditions should not be disregarded when the management is creating a corporate development strategy.
References
Hunt, I., Watts, A., & Bryant, S. K. (2020). Walmart’s international expansion: Successes and miscalculations. Journal of Business Strategy.
Martínez, A. B., Galván, R. S., & Alam, S. (2017). Financial analysis of retail business organization: a case of Wal-Mart Stores, Inc. Nile Journal of Business and Economics, 3(5), 67-89.
Xin, L., He, L., Bewli, J., Bowman, J., Feng, H., & Qin, Z. (2017). On the performance of Tailored Base-Surge policies: theory and application at Walmart. com. Com (December 18, 2017).
Collepals.com Plagiarism Free Papers
Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.
Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS
Why Hire Collepals.com writers to do your paper?
Quality- We are experienced and have access to ample research materials.
We write plagiarism Free Content
Confidential- We never share or sell your personal information to third parties.
Support-Chat with us today! We are always waiting to answer all your questions.
