Walmart, one of the largest retailers of the world, is considered a consumer-friendly organization. Walmart is a success story that all organizations should seek to imitate. Through necessity to fulfill their objective to be the number one global retailer, Walmart has developed one of the most successful IT infrastructures. Today people who are in search for a department store that offers convenience as well as discount, the first store that comes to mind is Walmart. The company, however, is considered a big challenge for its small competitors. On the one hand, Walmart is famous for creating jobs, on the other it is blamed for the demise of a number of businesses.
Walmart was founded in 1962 by Sam Walton. It was incorporated on October 31, 1969 , and later became a part of the New York Stock Exchange in 1992 as WMT. This paper will evaluate Walmart annual reports for 2010. Information listed on an annul report is essential for investors and shareholders in order to get an overall evaluation of the performance of the company. This report will evaluate the current ratio, quick ratio, ROI, ROA, and P/E ratios. Investors and annalist uses the information along as other various ratios in order to compute the current and future standing of a company.
Societies in the United States consist of interrelated social structures where every person has a purpose of working together with other parts to bring social strength. It can be said that Walmart works an interrelated force for the people in this country and it has an inherited tendency to balance and equilibrium. In addition, this giant organization provides value to customers by offering collection of a wide variety of consumer goods in a single location, and providing goods at the lowest prices.
There are many reasons for consumers to prefer shopping at Walmart. The retailer offers best prices and one can buy nearly everything he needs in one location. People like Walmart because it attracts business and enables people to stretch their dollars farther. The presence of a local Walmart in fact is an advantage to most of local businesses, as it is a suitable, quicksource for supplies and it offers consumers a wide range of goods at very reasonable prices.
Walmart continues to grow and increase in sales and earnings. For fiscal year 2010, Walmart posted record sales and earnings. The total net sale for the company was $405 billion which is $3.9 billion higher from the sale of 2009. But the increasing trend is far low from previous several years. Increase in sale in 2009 was 7.3 percent, in 2008 8.4 percent, in 2007 11.6 percent and in 2006 9.8 percent. The figures show that the increase percentage in the net sale of Walmart is continuously following a decreasing trend.
According to the Annual Report, the Operating Income of Walmart in 2010 is $24.0 billion, $1.2 billion up from 2009 and $2 billion up from 2008. The income from continuing operations in 2010 was $14,414 billion as compared to $13,254; 12,863; 12,189 and 11,386 billion for 2009, 2008, 2007 and 2006, respectively. The diluted earning per share from continuing operations is $3.72 billion for 2010 as compared to $3.35; $3.16; $2.92; and $2.72 billion for 2009, 2008, 2007 and 2006, respectively.
The figures are evidence of how strong Walmart as an organization is despite difficult economic times and when the world economy is facing a recession. Walmart has surpassed the generated free cash flow from $11,648 billion in 2009 to $14,065 billion in 2010.
As compared to 2009, 2010 is not a very good year for Walmart because the income figures could not maintain the increasing trends of previous years. But as compared to other organizations of such stature Walmart has performed well.
In 2010, Walmart has a current ratio of 0.8 and as of January 2008 it had a current ratio of 0.81. The quick ratio, which is defined as current assets minus inventory divided by current liabilities, is a measure of a corporation’s ability pay short-term obligations. In 2010 Walmart has a quick ratio of 0.2, and as of January, 2008, it had a ratio of 0.21. (NYSE:WMT, 2010) Walmart’s Return on Investment (ROI) remained unchanged for 2010 and 2009 at 19.3 percent, while the Return on Assets (ROA) is 8.9 percent in 2010 as compared to 8.4 percent of 2009.
(Walmart Annual Report 2010, 2010) Walmart continues to possess on the top ROI in its industry. The price-to-earning ratio or P/E ratio is derived by dividing the market price per share by the current earning per share. In 2010, Walmart’s P/E ratio is 13.4. (NYSE:WMT, 2010) Generally, an elevated P/E tells that investors are looking towards advanced future earnings growth.
Walmark is a source of attraction for other global organizations because it is one of the companies of the world which literally challenged the recession the world economy recently faced. Though the profit of the company in 2010 is lower as compared to previous years, it continued a trend of success.
There are many positive arguments for Walmart like it reduces consumer prices for a wide range of consumer products. But this is also a fact that it puts small merchants out of business which has its own negative impact on society. The company offers many new jobs but pays low entry-level wages with few or no benefits. Al Norman says in his book “The Case Against Wal-Mart”, that Walmart compels its employees to work extra hours without any benefits. ( Norman , 2004) Walmart revives defunct buildings in areas which are considered economically disadvantaged, but it is said to impose heavy social costs on the people it occupies.
In conclusion, we can say that when we will look from micro level sociological point of view it is very clear that Walmart is good for society because it brings to towns goods with low rates and creates employment. However, the macro level sociological point of view says otherwise. According to it Walmart is damaging small businesses. According to this point of view, Walmart destroys more jobs than it creates and with its low rates and huge collection of foreign goods it makes no places for small businesses to stay in the field.
Norman, A. (2004). _The Case Against Wal-Mart._ Atlantic City: Raphel Marketing.
NYSE:WMT. (2010). _WALMART STORES INC (NYSE:WMT)_. Retrieved November 24, 2010, from finapps.forbes.com: http://finapps.forbes.com/finapps/jsp/finance/compinfo/Ratios.jsp?tkr=wmt
Walmart Annual Report 2010. (2010). _Walmart Annual Report_. Retrieved November 24, 2010, from walmartstores.com: http://cdn.walmartstores.com/sites/AnnualReport/2010/PDF/WMT_2010AR_FINAL.pdf