Purdue Global University Comprehensive Financial Analysis Paper

Description

Your paper should approach 20-pages and should be viewed as a term paper. Ask your instructor any questions in the Virtual Office.
Refer to the following documents found in Course Documents to help you with this assignment:

Format for the Walmart Research Paper
Walmart Proforma Income Excel Spreadsheet
Walmart Ratio Solutions 2017 LAPM (Use this as a guide.)

In this assignment, you will be assessed based on the following Outcomes:
MT482-6: Determine the value of a company through conducting effective earnings forecasts and analysis.
GEL-1.02: Demonstrate college-level communication through the composition of original materials in Standard English.
This is a challenging activity. You should prepare to spend substantial time working on your response.
In this research paper, you will dig deep into the financial statements of Walmart. You will analyze the company’s past financial performance to help you forecast their future business, profitability, and cash flow. You will use these results to forecast the value of the company, what you think the company is actually worth today. You will compare your value to the current stock price, explaining any differences.
This is how decisions to buy and sell stock, and to buy and sell companies are made every day all over the world. The nightly business news is full of the “buy, sell, and hold” recommendations derived from analysis like this. I bet those jobs pay very nicely, don’t you!
Your paper must include the following criteria in addition to a title and references page:

Executive Summary: This is a 1-page summary of the entire paper that highlights the key results of your analysis and the resulting conclusions, and a summary of their defense.
Table of Contents: List of the sections in your paper.
Introduction: The company’s story- past, present, future. Include who they are (include current events and interesting facts), what they do (products), when they began (how long), and where they do business. Discuss the markets they operate in globally, the current market trends, and their competitors. (This should be at least 2-pages, likely more.)
Financial History: (3-year analysis of the company’s performance. Your report will include the ratio results plus an explanation and analysis of each ratio. Include the ratio, its results, and what the results mean for the company. (Liquidity and Debt, Asset Management, Profitability, and Market ratios. See ratio detail below.) Were there changes in the ratios? What could have caused the change? You must include an evaluation section of what each type of (LAPM) ratio means over the three years, then an overall comparison to validate your conclusion. (Show you understand and know the ratios.)
Financials Today: Current year with comparison to a competitor. What are they doing? How are they doing now? Add current events and focus on the current financials. Include an evaluation for each type of (LAPM) ratio for the current year, then an overall comparison to validate your conclusion. Include your findings for your competitor.
Financial Future: The story behind your analysis of your forecast of the future based on your spreadsheet. Why did you choose the specific growth rates? What impact did they have on the value of Walmart? Use the Walmart Proforma Income Excel spreadsheet located in Course Documents.
Conclusion: Your recommendation with justification of how much Walmart is worth. How much do you forecast each share to be worth? Defend your choice.

Required Ratio Analyses
Liquidity and Debt Ratios (L)

Current
Quick
Total Debt to Total Asset

Asset Management Ratios (Activity A)

Inventory Turnover
Fixed Asset Turnover
Total Asset Turnover

Profitability Ratios (P)

Profit Margin on Sales
Return on Assets
Return on Equity

Market Value Ratios (M)

Price Earnings Ratio
Market/Book

Start your Walmart research at the website below. Click on everything and explore. This website will be the sole source of financial information for this assignment.
Walmart, Inc. (n.d.). https://www.msn.com/en-us/money/stockdetails/finan…

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Terminal Value
Year 5
Walmart — Pro Forma Income Statements ($ in millions) M&A – Current Value Estimate – 2019 Actual
Year
Fiscal Year
2019
2020
2021
2022
2023
2024
$514.405
$524.693
$535.187
$545.891
$556.809
$567.945 Growth Rate
$385.301
$393.520
$401.390
$409.418
$417.606
$425.959
Gross Profit
$129.104
$131.173
$133.797
$136.473
$139.202
$141.986
Fixed Costs – SG&A
$96.469
$98.398
$100.366
$102.374
$104.421
$106.510
2,00%
2,00%
Sales
Variable Costs
75,00%
Other Income
($4.800)
Depreciation
$10.678
$10.892
$11.109
$11.332
$11.558
$11.789
EBIT
$17.157
$21.883
$22.321
$22.767
$23.223
$23.687
$4.790
$5.033
$5.134
$5.237
$5.341
$5.448
$12.367
$16.850
$17.187
$17.531
$17.882
$18.239
$4,19
$5,71
$5,83
$5,94
$6,06
$6,18
$27.742
$28.297
$28.862
$29.440
$30.029
0
0
0
0
0
0
$0
$27.742
$28.297
$28.862
$29.440
$394.812
Taxes
23,00%
Net Income
EPS – Before Interest Exp.
2,00%
Cash Flows
Operating Cash Flow
(OFFER)
Residual Value
Capital Spending
Cash Flow
Discount Rate (WACC)
11,00% assumed
Net Present Value
$322.757,14 Our current estimate of WalMart’s total value in Millions
Shares Outstanding
Value Per Share
$364.783,27 PE Mulitple
2.950.000.000
$
109,41
Based on your growth, PE, WACC, and Outstanding Shares Assumptions
this is your valuation of Walmart’s shares
Students, you change the numbers above in RED to reflect your analysis of the company … the value of the
company will update based on you assumptions …
Assumptions of growth, cost structure, taxes, PE Ratio, WACC, and Shares Outstanding.
20 assumed
Walmart 2019 Ratios
Liquidity & Debt
Ratios
Current
Quick
Total Debt to Total Asset
Current Assests/Current Liabilites
(CA – Inventories)/Current Liabilites
Total Debt/Total Assests
Asset Management
Inventory Turnover
Fixed Asset Turnover
Total Asset Turnover
CGS/ Inventories
Sales/ Net Fixed Assests
Sales/Total Assets
Profitability
Profit Margin on Sales
Return on Assests
Return on Equity
Net Income/Sales
Net Income/Total Assets
Net Income/Common Equity
Market Value
Price Earnings Ratio
Market/Book
Price of Shares/Earning Per Share
Market Price/Book Value (Per Share)
per year
0.8620
0.2189
59.49%
8.39
4.26
2.44
2.81%
6.86%
17.54%
14.92
2.58

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