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Wal-Mart Stores, Inc is the largest retailer and grocery chain store of the world. In United - page 1 / 2

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Wal_Mart

1FCF for 2009 as on Jan 31 2010

26.25-12.15 = $ 14.1 billion

2Economic Value Added or Economic Profit

Net income – Capital x cost of capital  = 15- *70.75 x .0645 = $10.44 billion

Note: Cost of capita of Wal-Mart

I have selected Wal-Mart with beta of 0.3 to be included in my portfolio, to be on safe side.  Definitely, it will not move faster when market will go up but at the same time it is less risky as it will also not move faster than market when it will go down.

The preset cost of equity of Wal-Mart according to CAPM is as follows:

.045 +.3 x .065 = .0645 or  6.45%

About Wal-Mart Operation

Wal-Mart Stores, Inc is the largest retailer and grocery chain store of the world. In United States of America 7.5% and 21% of total consumer expenditures on retail goods and groceries, respectively are spent on Wal-Mart goods. Sales in 2009 of the company are more than 50% of total sales of its seven closest competitors.  Due to its huge supply the company can get the cheaper goods from its supplier and with the most favorable terms and condition of payment period.  That is why the working capital of WALMART is negative.  It means that the current liabilities are more than current assets. The current assets in 2009 are 49 billion and current liabilities are 55 billion, it shows the strength of WALMART over its supplier.  The success of WALMART based on the theory of low profit margin.  It transfers all its strength to customer by selling them at cheaper rate.  It is evident from the fact that the total sales for 2009 is 408 billion and net income is 14 billion, which is around 3.7% of sales.  Wal Mart buying is from Chinese

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