In 1990 Wal-Marts sales revenue was almost $25811 million dollars.

Wal-Mart has a strong

reputation as a discount store, providing merchandise and services at everyday low prices
(EDLP). The biggest chunks of Wal-Marts revenue are groceries, health and beauty products
and Wal-Marts mark-ups are small. Therefore, Wal-Mart is driving its high sales numbers by
encouraging consumers to buy from them due to low prices.
Sams Club is responsible for 11.7% of revenues and 7.4% of operating income in 1990, which
represents a 5.6% increase from 1989.
Wal-Marts international segment is responsible for 24.6% of revenues and 21.7% of operating
income in 1990, which represents 9.1% increase from 1989.
Wal-Mart stores segment (domestic stores), is responsible for 63.7% of revenues and 79.6% of
operating income in 1990. During 1990, Wal-Mart stores enjoyed a 3.5% increase in store sales
compared to 1.6% growth in 1989, 2% in 1988, 3.4% in 1987 and 3.3% in 1986. The slowdown
in 1989 spending can be attributed to the economic slowdown.
Furthermore, in fiscal year 1990 Wal-Marts sales represents a 43% increase since 1986. The
increase in revenues is attributed to global store expansion as well as positive annual comparable
store sales growth for the last 10 years. In 1990 Wal-Mart had 23.7% gross margin, up slightly
from 23.5% in 1989 and 23.4% in 1988.

Ratio Analysis:
Current ratio: Wal-Marts current ratio is relatively low and it is due to high current liability
amounts. The number is around 0.88-0.9 and it did not fluctuate much in the five year period
presented for analysis.
Acid-test ratio equals quick assets divided by current liabilities. It is relatively low ratio that is
around 0.16-0.2 due to high accounts payable, commercial paper and long-term debt due within
one year.
Debt ratio is total liabilities divided by total assets. Wal-Marts debt ratio has been around 60%
because of the high amount of long-term debt. Shareholders equity is increasing which might
indicate a positive outlook for the future.
ROI is return on investment and is calculated by dividing net income by average total assets.
Average ROI is 8-12%. Wal-Marts ROI has been steady and around 8%.
ROE is return on equity and it is equal to net income divided by average owners equity. WalMarts ROE is around 20 % in the five year period presented for analysis. Average ROE for
American companies is around 10-15%.
Profit Margin is the amount of profit earned per dollar of sales. Wal-Marts profit margins in the
last five years have been a little over 3%.
Net income has been increasing steadily although it slowed a little in 1989 and that can be
attributed to a global economic slowdown.
The ability of the company to pay its creditors, times interest earned, has decreased slightly
since fiscal year 1986. The main reasons are the companys increased amounts of long term debt
and increased interest associated with it. The times interest earned has decreased from 14.6 in
1986 to 11.1 in 1990.

The number of a days sales in accounts receivable indicates that the numbers overall are very
good. Accounts receivable settle quickly because Wal-Marts customers use credit cards to make
purchases.
NDS in inventory has declined since 1986 and is an indication of better inventory management.
Wal-Mart has to maintain high inventory levels to be able to provide a wide range of goods to its
customers.
Property, plant and equipment turnover has not fluctuated much. Sales have been steadily
increasing in the last five years, so did the average property and equipment. Wal-Mart requires
many locations, distribution centers and transportation equipment for success of its business.
Earnings per share (EPS) are generally considered to be the single most important variable in
determining a share's price. Wal-Marts EPS has been growing steadily in the last 5 years as did
its stock price. Wal-Marts EPS increased from 2.46 in 1986 to 3.35 in 1990.
Cash Flow Analysis:
Cash flow from operations has been steadily increasing in the five year period provided for
analysis. In all five years presented cash flow from operations has exceeded net income. WalMart has been investing in international operations and the amounts invested are increasing
steadily while making payments for property, equipment, etc. Net cash used in investing
activities has decreased since 1989. The amounts of cash used in financing activity have been
increasing steadily in the time frame presented but Wal-Mart has decreased commercial paper
amounts, paying of long term debt, paying dividends and has a large stock repurchase program.
Although we see net decrease in cash and cash equivalents in fiscal 1989, which was mostly due
to large amounts spent on the stock repurchase and payment of long-term debt, cash and cash
equivalents amounts are positive at the end of each of the five years presented for analysis.