Ratio Analysis & Statements Of Cash Flow Final Report

3167 words - 13 pages

Final PaperStakeholders "rely on the company's periodic financial statements to provide basic information on the profitability of the firm" (Brealey et al, 2003, pg. 449). The information included in this paper will illustrate Wal-Mart and Target's history, products and services, and annual reports. These reports are intended to provide investors, creditors, and shareholders a glimpse into the financial successes and challenges a company goes through in a given year. Team A will use financial ratios to compare and analyze data from Wal-Mart and Target's balance sheet, income statement, and statement of cash flow. The paper will also highlight internal events that affect the company's cash position including cash generated by operating, financing, and investing activities. The impact of variable expenses will be discussed and five operating expenses will be given for three fiscal years along with an evaluation of operating leverage. Finally, Team A will compare areas of cash flow, operating, risk management, and profitability analysis for Target and Wal-Mart.History of Wal-MartOn July 2, 1962, Walton opened the first Wal-Mart store, Wal-Mart Discount City. Within five years the company expanded to 24 stores across the state of Arkansas and reached $12.6 million in sales. The company was incorporated as Wal-Mart Stores, Inc. on October 31, 1969, and in 1970 opened its home office in Bentonville, Arkansas, and its first distribution center (Wal-Mart, 2007). The company began trading stock at this time as a publicly held company on October 1, 1972, and was listed on the Ney York Stock Exchange shortly thereafter (Wikipedia, 2007). Wal-Mart continued to grow rapidly during the 1980s and by its 25th anniversary in 1987; there were 1,198 stores with sales of $15.9 billion and 200,000 associates (Wal-Mart, 2007).History of TargetIn 1962, the Dayton Company, using a concept developed by John F. Geisse, entered discount merchandising by opening its first Target discount store in Roseville, Minnesota. The name "Target" originated from Dayton's publicity director, Stewart K. Widdess, and was intended to prevent consumers from associating the new discount store chain with the department store (Target, 2007). Target Stores lost money in the initial years; however, in 1965 Target reported its first gain with sales reaching $39 million, allowing a fifth store to open in Minneapolis. Target Stores expanded outside of Minneapolis. In 1967, the Dayton Corporation was established and went public with its first offering of common stock (Wikipedia, 2007).Products and ServicesWal-Mart and Target are two very similar companies in the retail industry, providing many of the same products and services at low prices. Wal-Mart services include garden, automotive services, optometry, gift registry, photograph developments, portrait studio, grocery (at selected Wal-Mart's) pharmacy and layaway. Wal-Mart provides Internet shopping from a website. In addition, Wal-Mart provides...

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