BUSINESS FINANCE SHORT PAPER ASSIGNMENT

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Sung Woo Park

International American University
FIN 500: Financial management
Vahick Yedgarian, Ph.D., J.D., M.B.A., M.S.
April 15th, 2021

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According to the market analysis of Walmart, the retail firm is considered an unstoppable retail force. It is ranked as the first or number retail firm and the largest business organization in revenue and employee size. The company’s total number of employees is estimated to be 2.2 million employees across its different stores. Apart from the retail business line, it also undertakes wholesale business activities (Tan, 2017). It provides all types of assortment merchandise as well as services for affordable costs. In this research paper, the main objective is to undertake a cash flow analysis statement of Walmart and its Relevance to its investors (Tan, 2017).
A cash flow statement is an important financial statement. A cash flow statement is understood as the financial statement that summarizes the financial or cash amounts. It is a summary of the amount in cash and cash equivalents (Murphy, 2021). In other words, it reflects the amount of cash entering and leaving an organization. The cash flow statement provides measures of a company’s financial strength and reflects its position in terms of revenue (Murphy, 2021). Besides, it helps investors to make the right financial decision.
The cash flow statement is an important financial document to investors. Investors always have a trait of looking at how a company is performing by evaluating the progress, the trends among other issues, and deciding whether to invest in the company. Investment decision-making in an in-depth analysis is usually achieved by looking at the cash flow performance based on an analysis of different elements of the statement.
The cash flow statement for Walmart is an important document to its investors. The cash flow statement of Walmart is an important measure of the profitability of the company. Besides, it provides investors with a clear picture and future projection outlook of how the company will be. Based on the analysis of the company’s cash flow statement company has been recording high levels of revenue over the past few years. As a result, it has been ranked as the largest company in terms of revenue collected. Such a specific entity of the company is a clear reflection that Walmart is indeed a profitable firm in profitability (Tan, 2017). Hence, it is a clear reflection to the investors that the company is making money instead of losses. For instance, over the past few years, the company has recorded a revenue increment and stability. The economic analysis measures the company revenue growth in terms of net sales changes to be 7.2% (WMT | Walmart Inc. Annual Cash Flow Statement | Market Watch. Market Watch, 2021). Such a growth rate is indeed admirable and attractive to investors searching for companies to invest in. The company’s revenue level is a general overview and clear or direct instant and reflection of how the company is performing.
Moreover, investors of Walmart can use the company’s cash flow statement by looking at the various elements of the company’s breakdown. One of the elements of the Walmart cash flow statement is the operating cash flow. The operating cash flow is a flow of cash inflows and outflows of the company in terms of all the operational activities. For Walmart, the operating income is indeed large. Hence, it is a clear reflection that the company undergoes substantial income flow (Ball, 2018). The operating activities are important to the investors since it shows them the amount of income the company is generating, their expenditure behavior on various aspects such as overhead, expenses among forms of operation costs (Tan, 2017).
The other element of the cash flow statement is the investment cash flow. The investment cash flow is an important element of the cash flow statement that plays a key role in enabling investors to make the right decision on whether or not to invest in a company. The platform or part of the cash flow statement shows the cash flow obtained from the company’s investment activities (Tan, 2017). Based on the overview of the cash flow statement for Walmart, the company is indeed performing well and hence providing a good image to the investors. As an investor, it is worth investing in the company since its investment cash flow section reflects better performance in non-current assets and current assets (Ball, 2018).
Furthermore, there is also the financial cash flow section. Walmart’s financial cash flow section is showing the cash between the company and its owners and its creditors. It provides investors with key financial data on borrowed money, debt repayment information, and the payment of financial dividends. It also presents the capital that has been invested into the company’s operation within the required financial year. For the investors who are willing to be part of the business management stakeholders to assess whether their capital will be valuable. The last section is usually the net cash flow section. The net cash flow section provides the net income after the company has deducted all its expenses. It is a clear reflection of the company’s profitability performance and enables investors to make the right decision based on the company’s profitability performance (Ball, 2018).

Summary and Conclusion

In conclusion, Walmart is among the best-performing companies in the world. The company has been recording the highest revenues in the economy compared to other bigger corporations. However, investors always look at the cash flow statement and evaluate various entities and financial parameters to make the right decision. The cash flow statement of Walmart is indeed a true reflection of what the company is. From a realistic perspective, it is worth the value to invest in the company as an investor.

References

Ball, j. (2018). Why Is Cash Flow Important to Investors? | Fluidly. Fluidly. https://fluidly.com/blog/why-is-cashflow-important-to-investors/

Murphy, C. (2021). Understanding the Cash Flow Statement. Investopedia. https://www.investopedia.com/investing/what-is-a-cash-flow-statement/

Tan, Z. (2017). Application of Discounted Cash Flow Model Valuation–Wal-Mart. Available at SSRN 3100702.

https://dx.doi.org/10.2139/ssrn.3100702

WMT | Walmart Inc. Annual Cash Flow Statement | Market Watch. Market Watch. (2021).

https://www.marketwatch.com/investing/stock/wmt/financials/cash-flow
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