Refer to the Financial Statements for Wal*Mart, Below

question 14

question 14

Essay

Refer to the financial statements for Wal*Mart, below

Wal"Mart  (in millions)	Consolidated Statements of Operations  Fiscal Year Ended
	31-Jan X2	31-Jan X3	31-Jan X4	31-Jan X5	31-Jan X6	31-Jan X7	31-Jan X8
Net sales	$ 43,887	$ 55,484	$ 67,345	$ 82,494	$ 93,627	$ 104,859
Rentals from licensed dept	28	36	47
Other income-net	374	465	593	918	1,122	1,287
Total revenues	44,289	55,985	67,985	83,412	94,749	106,146	118,884
Cost of sales	34,786	44,174	53,444	65,586	74,564	83,663
Operating, Selling, General& Administrative Expenses	6,684	8,321	10,333	12,858	14,951	16,788
Total operating expenses	41,470	52,495	63,777	78,444	89,515	100,451
Operating income	2,819	3,490	4,208	4,968	5,234	5,695	6,378
Interest costs
Debt	113	143	331	520	692	629
Capital leases	153	180	186	186	196	216
	266	323	517	706	888	845	930
Income before taxes	2,553	3,167	3,691	4,262	4,346	4,850	5,449
Income tax expense
Current	906	1,137	1,325	1,572	1,530	1,974
Deferred	39	35	33	9	76	(180)
	945	1,172	1,358	1,581	1,606	1,794	2,016
Net income	$ 1,608	$ 1,995	$ 2,333	$ 2,681	$ 2,740	$ 3,056	$ 3,433
EPS	$ 0.70	$ 0.87	$ 1.02	$ 1.17	$ 1.19	$ 1.33
Dividends per share (for the whole year)	$ 0.09	$ 0.11	$ 0.13	$ 0.17	$ 0.20	$ 0.21

$\begin{array}{|l|r|r|}\hline\text{Shareholders' Equity}&&\\\hline\text{Preferred stock ( \$.10 par value: 100 share authorized, none issued)}&&\\\hline\text{Common stock ( \( \$ .10 \) par value; 5,500 shares}&&\\\text{authorized. 2,285 and 2,293 issued and outstanding in}&&\\\hline 1997 \text { and } 1996, \text { respectively) } & 228 & 229 \\\hline \text { Capital in excess of par value } & 547 & 545 \\\hline \text { Retained earnings } & 16,768 & 14,394 \\\hline \text { Foreign currency translation adjustment } & {(400)}&{(412)} \\\hline \text { Total shareholders' equity } & \underline{17,143} & 14,756 \\\hline \text { Total liabilities and shareholders' equity } & \$ 39,604 & \$ 37,541 \\\hline\end{array}$
a. Calculate for X7 the ratios listed below. X6 numbers are provided for comparative purposes. $$\begin{array} { | l | r | r | } \hline & \underline { \mathbf { X } 6 } & \underline { \mathbf { X } 7 } \\\hline \text { Inventory turnover } & 4.96 & \\\hline \text { Days inventory outstanding } & 73.56 & \\\hline \text { Accounts receivable turnover } & 120.58 & \\\hline \text { Days receivable outstanding } & 3.03 & \\\hline \text { Payables turnover } & 12.39 & \\\hline \text { Days payables outstanding } & 29.46 & \\\hline \text { Length of operating cycle } & 76.58 & \\\hline \text { Length of cash cycle } & 47.12 & \\\hline \text { Current ratio } & 1.51 & \\\hline \text { Quick ratio } & 0.12 & \\\hline\end{array}$$
b. Working capital management is an important consideration for many companies. Which component of Wal*Mart's working capital do you think it spends most time managing? That is, which component is likely to be the most important? Why? What has happened to this component from X6 to X7?

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question 14

Essay

Refer to the financial statements for Wal*Mart, below