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Walmart Balance Sheets-Cal

WAL-MART Statement Of Financial Position Classified - Audited (USD $)	Q2, 2011	Q1, 2011	12 Months Ended
In Millions	Jul. 31, 2011	Apr. 30, 2011	Jan. 31, 2011	Jan. 31, 2010	Jan. 31, 2009
Assets						Calculations for Analysis of Balance Sheet Items
Current assets:						Percentage of asset items w.r.t to total assets
Cash and cash equivalents	8,102	9,400	7,395	7,907	7,275	4.18%	5.05%	4.09%	4.63%	4.45%
Receivables, net	5,265	4,785	5,089	4,144	3,905	2.72%	2.57%	2.82%	2.43%	2.39%	9.50%
Inventories	38,651	38,335	36,318	33,160	34,511	19.96%	20.60%	20.10%	19.43%	21.12%	69.75%
Prepaid expenses and other	3,308	3,330	2,960	2,980	3,063	1.71%	1.79%	1.64%	1.75%	1.87%	5.97%
Current assets of discontinued operations	88	108	131	140	195	0.05%	0.06%	0.07%	0.08%	0.12%	0.16%
Total current assets	55,414	55,958	51,893	48,331	48,949
Long Term Assets
Property and equipment:							0.6056359077
Land			24,386	22,591	19,852
Buildings and improvements			79,051	77,452	73,810
Fixtures and equipment			38,290	35,450	29,851
Transportation equipment			2,595	2,355	2,307
Construction in process	zubair ali raja: zubair ali raja: Walmart did not provide breakup of its property and equipment for the Quarter 1 of 2001	zubair ali raja: zubair ali raja: Walmart did not provide breakup of its property and equipment for the Quarter 1 of 2001	4,262
Property and equipment(Sub)	153,985	151,766	148,584	137,848	125,820	79.51%	81.57%	82.24%	80.75%	76.99%
Less accumulated depreciation	(45,256)	(45,473)	(43,486)	(38,304)	(32,964)
Property and equipment, NET	108,729	106,293	105,098	99,544	92,856	56.15%	57.13%	58.17%	58.31%	56.82%	81.70%	17.09%
Property under capital leases:
Property under capital leases	6,102	6,064	5,905	5,669	5,341	3.15%	3.26%	3.27%	3.32%	3.27%	4.66%
Less accumulated amortization	(3,241)	(3,213)	(3,125)	(2,906)	(2,544)
Property under capital leases, NET	2,861	2,851	2,780	2,763	2,797	1.48%	1.53%	1.54%	1.62%	1.71%	2.19%
Goodwill	21,532	16,895	16,763	16,126	15,260	11.12%	9.08%	9.28%	9.45%	9.34%	12.99%
Other assets and deferred charges	5,120	4,068	4,129	3,942	3,567
Total long term assets	138,242	130,107	128,770	122,375	114,480	71.39%	69.93%	71.28%	71.69%	70.05%
Total assets	193,656	186,065	180,663	170,706	163,429
Liabilities and shareholders' investment						Percentages of liability items w.r.t total liabilities
Current liabilities:
Short-term borrowings	6,435	3,451	1,031	523	1,506	5.33%	2.92%	0.94%	0.53%	1.56%
Accounts payable	34,701	34,321	33,557	30,451	28,849	28.72%	29.07%	30.67%	31.14%	29.94%
Divident payable	2,556	3,828				2.12%	3.24%	0.00%	0.00%	0.00%
Accrued liabilities	17,815	15,962	18,701	18,734	18,112	14.75%	13.52%	17.09%	19.16%	18.80%
Accrued income taxes	898	927	157	1,365	677	0.74%	0.79%	0.14%	1.40%	0.70%
Long-term debt due within one year	1,787	3,173	4,655	4,050	5,848	1.48%	2.69%	4.25%	4.14%	6.07%
Obligations under capital leases due within one year	404	345	336	346	315	0.33%	0.29%	0.31%	0.35%	0.33%
Current liabilities of discontinued operations	28	44	47	92	83	0.02%	0.04%	0.04%	0.09%	0.09%
Total current liabilities	64,624	62,051	58,484	55,561	55,390	53.49%	52.55%	53.45%	56.82%	57.49%
Long Term Liabilities:
Long-term debt	45,238	45,486	40,692	33,231	31,349	37.45%	38.52%	37.19%	33.99%	32.54%
Long-term obligations under capital leases	3,214	3,211	3,150	3,170	3,200	2.66%	2.72%	2.88%	3.24%	3.32%
Deferred income taxes and other	7,304	6,902	6,682	5,508	6,014	6.05%	5.85%	6.11%	5.63%	6.24%
Redeemable noncontrolling interest	428	423	408	307	397	0.35%	0.36%	0.37%	0.31%	0.41%
Total long term liabilities	56,184	56,022	50,932	42,216	40,960	46.51%	47.45%	46.55%	43.18%	42.51%
Total liablities (Short and long term)	120,808	118,073	109,416	97,777	96,350
Equity:						Percentages of equity items w.r.t total equity
Preferred stock ($0.10 par value; 100 shares authorized, none issued)	0	0	0	0	0
Common stock ($0.10 par value; 11,000 shares authorized, 3,786 and 3,925 issued and outstanding at January 31, 2010 and January 31, 2009, respectively)	352	352	352	378	393	0.48%	0.52%	0.49%	0.52%	0.59%
Capital in excess of par value	3,524	3,446	3,577	3,803	3,920	4.84%	5.07%	5.02%	5.21%	5.84%
Retained earnings	62,779	60,330	63,967	66,638	63,660	86.18%	88.73%	89.78%	91.37%	94.90%
Accumulated other comprehensive loss	1,286	878	646	(70)	(2,688)	1.77%	1.29%	0.91%	-0.10%	-4.01%
Total Walmart shareholders' equity	67,941	65,006	68,542	70,749	65,285	93.26%	95.61%	96.20%	97.01%	97.33%
Noncontrolling interest	4,907	2,986	2,705	2,180	1,794	6.74%	4.39%	3.80%	2.99%	2.67%
Total equity	72,848	67,992	71,247	72,929	67,079
Total liabilities and equity	193,656	186,065	180,663	170,706	163,429
Description and Analysis
The Company considers investments with a maturity of three months or less when purchased to be cash equivalents. All credit card, debit card and EBT transactions that process in
less than seven days are classified as cash and cash equivalents. The amounts due from banks for these transactions classified as cash totaled $1.2 billion and $2.6 billion
at January 31, 2011 and 2010, respectively. In addition, cash and cash equivalents includes restricted cash related to cash collateral holdings from various counterparties
as required by certain derivative and trust agreements of $504 million and $469 million at January 31, 2011 and 2010, respectively.
Cash and cash equivalents are only 4.18% of the total assets as on 31st July 2011
and 4.1% of total assets as on 31 Jan 2011 which shows that Walmart has invested its assets successfully in the firms operationsin order to earn on investment and its funds are not kept idle in the form of excessive cash.
Cash as on 31 July 2011 in 14.62% of the total current assets, which also reflects a reasonable figures. Over the last three year the cash is not gone above 6% of total assest which is pretty much good job from the management.
Recievable includes the amount due to the company from outside entities with on one year or within operating cycle which ever is longer.
Receivables consist primarily of amounts due from: • insurance companies resulting from pharmacy sales; • banks for customer credit card, debit card and electronic bank transfers
that take in excess of seven days to process; • suppliers for marketing or incentive programs; • consumer financing programs in certain international subsidiaries; and • real estate transactions.
Walmart reserve for uncollectible receivables based on historical trends in collection of past due amounts and write-off history. Firm's over- all reserve for uncollectible receivables was $252 million and $298 million
Walmart International segment offers a limited amount of consumer credit products, principally through subsidiaries in Chile, Canada and Mexico. At January 31, 2011, the balance of these receivables was $673 million,
net of its reserve for doubtful accounts of $83 million, and is included in receivables, net on the accompanying consolidated balance sheet.
WalMart is managing the recievable in a very better way, they are on 2.7% of the total assets and 9.5% of the current assets for the last reported quarterly balance sheet.
It means that company is successfully able to collect its recievables through better policy and continuous followup with the debitor.
In same point in time, as expected inventory is the 20% of the total assets and 69.75% of current assets. Owing to the nature of business, company have to maintain sufficient inventory on it shelves and distribution centers
to offer different varieties of products all the time to its customers. Therefore it shows that company is doing good in managing its inventory in order to remain competitive by offer assortment of merchandise at its stores.
For Walmart U.S. segnement inventory is recorded on lower cost or market value (whichever is low) using the LIFO system. For Sam clubs operation cost is recorded on weighted-average basis using the LIFO system of accounting.
However FIFO method of accounting is used for recording inventory in Walmart International segment.
Deferred tax assets are tax-related assets created through timing differences in the values of assets for tax versus book purpose.
Property, plant and equipment is recorded at cost, less accumulated depreciation. Included in property, plant and equipment are
land and buildings, fixture & equipment, transportation equipment and construction in process. The company uses straight-line for charging depreciation on poperty and equipment.
The estimated useful time is as follows:
Building & Improvement: 3 to 40 years
Fixture & Equipment: 3 to 25 years
Transportation equipment: 4-15 years
Property and equipment asset is the biggest asset item for the Walmart as it is 56.15% of the total assets and 81.70% of long term assets as on 31 Jul 2011. This reflect nearly 9000 units of Walmart in its all three business segment.
This item is also increased from $92.8 billion to $108.7 billion from 31 Jan 2009 till last quarter which show the strategic move of EXPANSION by the Walmart's management.
Land is increased by 23% within last three years and fixute&equipment by 7% from Jan 2009 to Jan 2011, construction in process is included in the balance sheet of Jan 31, 2011 which shows that Walmart is trying to acquire more market share.
The interest costs associated with construction projects are capitalized and included as part of the cost of the project. When no debt is incurred specifically for a project,
interest is capitalized on amounts expended on the project using weighted-average cost of borrowing. Capitalization of interest ceases when the project is substantially complete.
Interest costs capitalized on construction projects were $63 million, $85 million and $88 million in fiscal 2011, 2010 and 2009, respectively.
Property under capital lease is just 2.19% of the long term assets which shows that almost all the units are purshased by the Walmart and they are not doing much business in leased or rental units.
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is allocated to the appropriate segment when acquired. Other acquired
intangible assets are stated at the fair value acquired as determined by a valuation technique commensurate with the intended use of the related asset. Goodwill and indefinite-lived intangible assets
are not amortized; rather, they are evaluated for impairment annually during fourth fiscal quarter or whenever events or changes in circumstances indicate that the value of the asset may be impaired.
Definite-lived intangible assets are considered long-lived assets and are amortized on a straight-line basis over the periods that expected economic benefits will be provided.
Goodwill is evaluated for impairment by determining the fair value of the related reporting unit. Fair value is measured based on the discounted cash flow method and relative market-based approaches.
The analyses require significant management judgment to evaluate the capacity of an acquired business to perform within projections.
During fiscal 2011, Walmart U.S. completed an immaterial business acquisition that resulted in the recognition of $32 million in goodwill.
Indefinite-lived intangible assets are included in other assets and deferred charges on the accompanying Consolidated Balance Sheets. These assets are evaluated for impairment based on their fair values
using valuation techniques which are updated annually based on the most recent variables and assumptions. There were no impairment charges related to indefinite-lived intangible assets recorded
during the fiscal years ended January 31, 2011, 2010 and 2009.
About $30 billion assests of Walmart has increased in the last three years which shows that Walmart is going to explore new markets for more revenue generation and profit earning.
Among this $30 billion about $24billion is financed through debt and remaining $6 billion has financed through equity.
Short-term borrowings consist of commercial paper and lines of credit. Short-term borrowings outstanding at January 31, 2011 and 2010 were $1.0 billion and $523 million, respectively.
The Company has certain lines of credit totaling $11.5 billion, most of which were undrawn as of January 31, 2011 and is committed with 28 financial institutions. In conjunction with
these lines of credit, the Company has agreed to observe certain covenants, the most restrictive of which relates to maximum amounts of secured debt and long-term leases.
Short-term borrowing is almost doubled by the end of last quarter in comparison to the quarter ended Apr 30, 2011. This short term borrowing is usually availed for running daily operation that includes the purchase of
inventory as well. This high figure shows the demand of Walmart products in rising that ultimately means higher revenue generation. Account payables are also well curtailed and showing a smooth trend. Owing to the nature of Walmart business account payble
is more than 50% of the current liabilities as Walmart takes inventory from suppliers on credit and then pay them back as per credit terms. The high figure for account payable in relation to total liabilities i.e. 28.72% is an engouraging sign.
It means that owing to the name of Walmart they are able to get most products for retail sales on credit from suppliers and then they may be paying them after the sale of the same item from their store.
Walmart is a big name from where people go for regular shopping especially in USA and the products on Walmart's shelved may get sold prior to its payment by walmart to its suppliers.
Therefore without even spending money on many products, Walmart is earning revenue and from that revenue they pay the suppliers from whom they buy products on credit and retain its profit margin hence utilizing its distribution systems in the best way they can.
Divident payable shows that Walmart distrbute the profit in its shareholders on regular basis which opened prospects for the Walmart to get more equity whenever needed for its future expansion plan as it is considered a good sign in financial community.
Portion of long-term debt due with in a year is considered as current liability. Likewise obligations under capital lease payable within a year is also categorized as current liability.
There is another item in the liability side that is "Accrued liabilities", this actually contains the following three components:
1 ) Accrued wages and benefits include accrued wages, salaries, vacation, bonuses and other incentive plans.
(2) Self-insurance consists of all insurance-related liabilities, such as workers’ compensation, general liability, vehicle liability, property and employee-related health care benefits.
(3) Other accrued liabilities consists of various items such as accrued taxes, maintenance, utilities, advertising, interest, and severance liabilities.
Accrued liabilties are 14.75% of the total libilities as on 31 Jul 2011, which shows that a significant amount is paid by the firm in the form of incentive plans and different kind of insurances
On the libility section there is another significat item that is "Long term debt" which is raised to approx $14 billion in last three years. This long term debt basically contributes toward the significant part of the expansion plan. Management
is more inclined to finance its expansion of new and improvement of existing facilities from the long term debt rather floating more shares in equity market. Long term debt is 37.45% of the total
liabilities at the end of 31 Jul 2011 which means that it has increased almost at the same pace as the total liabilities itself has increased. The details regarding due amounts of long-term debt of Walmart is as under:
Amount in billions:
Fiscal Year	Annual Marurity
2012	4.65
2013	1.74
2014	5.11
2015	2.83
2016	4.66
Thereafter	26.07
Total	45.06
Walmart's net earning for the period ended 31 Jan 2011 is $16.38 billion which means that its future cash flows expected to meet the payment requirementsof long-term debt as per above schedule.
The company has classified deferred taxes under the prepaid expenses and other on asset side and under accrued liabilities on liabilities portion of the balance sheet.
Amounts included in accumulated other comprehensive income (loss) for the Company’s derivative instruments and minimum pension liabilities are recorded net of their related income tax effects.
The currency translation adjustment includes a net translation loss of $1.0 billion and $545 million and a gain of $1.2 billion at January 31, 2011, 2010 and 2009, respectively, related to net investment
hedges of operations in the United Kingdom and Japan. Walmart reclassified $(14) million and $83 million, respectively, in fiscal 2011 and 2010 from accumulated other comprehensive income (loss)
to earnings to offset currency translation losses on the remeasurement of non-U.S.-denominated debt. The major section in the Walmart equity section is retained earning which is 86% of the total equity. It means that company is reinventing its earning to
expand the firms operations.
According to the information provided in the balance sheet of Walmart, we must say that company is managing its financial resources in a better way. There are no idle funds placed in the form or excess cash. Recievable are on lower side as the collection
procedures are well defined with continous follow up. The rising trend in the revenue obiviously increased the recievables but this should be taken as a positive sign as they are only 2.7% of the total assets and 9.5% on the total current assets as of 31 Jul 2011.
Inventory of companies like Walmart has to be on higher side because they have to place different variety of items at all times on the shelves and distribution centers. Therefor Walmart has high inventory in comparison to other items of current assets.
Inventory is the second huge item after property and equipment on the balance sheet of the company which is the good sign for the walmart. This depicts that Walmart is doing well in implementing its strategy of providing assortment of merchandise to its
customers which is very important in retail store business. Property and equipment is the biggest item on asset side asWalmart has presence in all the continents of the world except Antartica. They have almost 9000 units most of them are self purchased
by the company. The value of this item has increased by 17.24% in the last three years which reflects the strategic intension of the management to expand and gain more market share. This is exactly like what we know that the balance sheet figures actually
reflect the strategic decision of the management. As firm is expanding and its revenues are increasing, the account payable item is also increased. The high account payable figure reflects that company is getting supplies on credit and even can sell inventories
before payment of the same, hence getting the profit margin without investing in most of the supplies. This item has increased to approx $6 billion in the last three years. Accrued liabilities 14.75% of the total liabilities as of 31 Jul 2011. It includes, wages and
employee benefit liabilities, insurance liabilities of all type and deffered taxes. This shows that huge amount of benefits have to be paid by the company to its employees as Walmart has almost 2.1 million associates working all over the world. Most of the
expansion is financed from long term debt. Interest on these debts are capitalized on the project cost but when the project is substansially completed no more interest is capitalized on the projects. Assest base of the company is increased by $30 billion in
last three years and most of them is financed by long term debt i.e. $16 billion as equity is almost stagnant. As Walmart operates in various countries it has entered into derivative financial instruments in order to manage currency risk, interest rate risk and
equity market risk. Derivative instruments, when used and accounted properly can help world-wide companies protect the value of their assets and eliminate large fluctuations on the financial statements. The overall components of the balance sheet is fairly
steady and resulting income for 2010 indicates that Walmart is progressing well with its strategy of expansion, low price policy, fast and timely services to the customers. Net income is increasing on a fast pace in the last three years.
The Company’s performance metrics emphasize three priorities for improving shareholder value: Growth, Leverage and Returns. The Company’s priority of growth focuses on sales through comparable store and club sales and unit square feet growth;
the priority of leverage encompasses the Company’s objective to increase its operating income at a faster rate than the growth in net sales by growing its operating, selling, general and administrative expenses (“operating expenses”) at a slower rate
than the growth of its net sales; and the priority of returns focuses on how efficiently the Company employs its assets as reflected in its return on investment (“ROI”) and how effectively the Company manages working capital as reflected in its free cash flow.
What is the best balance sheet for my company:
Best balance sheet for my company is that which reflects its strategy in the most appropriate way. This current balance sheet of Walmart and even of the last three years is supporting the of Walmart's strategic intent. Company is expanding so did its
asset side. The increase in asset side is financed mostly by the increase in debt and partly by the increase in equity. This expansion lead to increase in revenue and its reflection is also in the account recievable. From Jan 31, 2009 till 31, Jan 2011
revenue is increased from $404 billion to $ 419 billion and consequently account recievable also increased from $3.9 billion to $5.1 billion. Company stratgy of providing variety of products to its customers in order to remain competitive in the industry even
support it strategy of expansion. This strategy lead them to invest in inventory and this will lead to increase the account payable as well. Walmarts has increasd it inventory from $34.5 billion to $36.3 billion and it account payable also increased from
$28.8 billion to $33.56 billion from 31Jan 2009 to 31 Jan 2011. Invetory increase lead to increase the account payable as well as it is the mirror of inventory. Hence this blance sheet looks to me the good one for me because the figure of this balance sheet
is describing the strategies of Walmart which I have earlier studied in my previous assignment. I hope that based on the projection from quarterly income statement of Walmart for the 6 month period ended 31 Jul 2011Walmart likely to get the revenue of
$430 billion by 31 Jan 2012. It means an icreased revenue of $11 billion as compared to the same period last year.If Walmart will follow the strategy and keep expanding business, maintaining best supply chain mangement, offering good product and
deploy good pricing strategy it will surely be reflected by the figures of balance sheet like they are reflecting now and best balance sheet will accuratly describe the strategic intent of any business.
Some calculations as an exercise from last lecture:
Price of Target stock	$52.65
EPS	$4.70
P/E (Price Erning Ratio)	11.20
Interpertation:	It will take 11.2 years to completely pay back the Walmart's entire stock.
Revenues: (Year ended Jan 31, 2011)	$421.85	(in billions)
Daily average sales	$1.17	(in billions)
Account recievables( Jan 31, 2011)	$5.90	(in billions)
Days in Account receivables, [Ac Receivables/ Daily Avg Sales]	5.03	Days
Interpertation:	It means that Walmart with having $421.85 billion revenue annually is controlling its customers very perfectly
	as it takes only 5 days to recover its sales proceeds from customers.
Items from Income Statement of (Year ended Jan 31, 2011)
Revenues: (Year ended Jan 29, 2011)	$421.85	(in billions)
Cost of goods sold	315.3
Gross profit	$106.55
Percentage of gross profit to total revenues	25.26%
Interpertation	For each dollar sold Walmart abled to get the gross profit of 25 cents which is less than Target who are getting 32 cents.
Items from Income Statement of (Year ended Jan 31, 2011)	in Billion
Revenues: (Year ended Jan 29, 2011)	$421.85
Cost of goods sold	$315.30
Gross profit	$106.55
Operating expenses	$81.02
Operating Income	$25.53
Interest Expense	$2.00
Income Tax	$7.60
Net Income	$15.93
Distribution of gross profits in management	76.04%	This means that management is getting almost 76% of the gross profit in managing buisness operations of Target
Distribution of gross profits to bank	1.88%
Distribution of gross profits to government	7.13%
Distribution of gross profits to share holders	14.95%	Share holders get only 13.5% of the gross profit of Target
Sum of all distribution of gross profit	100.00%

Target Balance Sheets-Cal

TARGET Consolidated Statements of Financial Position (USD $)	Jul. 30, 2011	Apr. 30, 2011	Jan. 29, 2011	Jan. 30, 2010	Jan. 31, 2009
In Millions, except Share data
Assets						Calculations for Analysis of Balance Sheet Items
Current Assets						Percentage of asset items w.r.t to total assets
Cash and cash equivalents, including marketable securities of $1,617 and $302	890	1,424	1,712	2,200	864	1.96%	3.31%	3.92%	5.03%	1.96%
Credit card receivables, net of allowance of $1,016 and $1,010	5,722	5,721	6,153	6,966	8,084	12.58%	13.31%	14.08%	15.94%	18.33%
Inventory	7,926	7,696	7,596	7,179	6,705	17.42%	17.90%	17.38%	16.43%	15.20%
Other current assets	1,521	1,527	1,752	2,079	1,835	3.34%	3.55%	4.01%	4.76%	4.16%
Total current assets	16,059	16,368	17,213	18,424	17,488	35.30%	38.07%	39.38%	42.16%	39.65%
Long Term Assets
Property and equipment
Land	5,999	5,989	5,928	5,793	5,767	13.18%	13.93%	13.56%	13.25%	13.08%
Buildings and improvements	26,092	23,197	23,081	22,152	20,430	57.35%	53.95%	52.81%	50.69%	46.32%
Fixtures and equipment	4,906	4,691	4,939	4,743	4,270	10.78%	10.91%	11.30%	10.85%	9.68%
Computer hardware and software	2,392	2,270	2,533	2,575	2,586	5.26%	5.28%	5.80%	5.89%	5.86%
Construction-in-progress	571	837	567	502	1,763	1.25%	1.95%	1.30%	1.15%	4.00%
Accumulated depreciation	(11,587)	(11,336)	(11,555)	(10,485)	(9,060)
Property and equipment, net	28,373	25,648	25,493	25,280	25,756	62.36%	59.65%	58.33%	57.84%	58.40%
Other noncurrent assets	1,067	980	999	829	862	2.35%	2.28%	2.29%	1.90%	1.95%
Total long term assets	29,440	26,628	26,492	26,109	26,618	64.70%	61.93%	60.62%	59.74%	60.35%
Total assets (Current and noncurrent)	45,499	42,996	43,705	44,533	44,106	100.00%	100.00%	100.00%	101.89%	100.00%
Liabilities and shareholders' investment						Percentages of liability items w.r.t total liabilities
Current Liabilities
Accounts payable	6,519	6,296	6,625	6,511	6,337	21.45%	22.68%	23.48%	22.31%	20.85%
Accrued and other current liabilities	3,721	3,229	3,326	3,120	2,913	12.24%	11.63%	11.79%	10.69%	9.58%
Unsecured debt and other borrowings	1,130	1,124	119	796	1,262	3.72%	4.05%	0.42%	2.73%	4.15%
Nonrecourse debt collateralized by credit card receivables	250	189	0	900		0.82%	0.68%	0.00%	3.08%	0.00%
Total current liabilities	11,620	10,838	10,070	11,327	10,512	38.23%	39.03%	35.69%	38.81%	34.59%
Long Term Liabilities
Unsecured debt and other borrowings	12,661	10,640	11,653	10,643	12,000	41.66%	38.32%	41.30%	36.47%	39.48%
Nonrecourse debt collateralized by credit card receivables	3,499	3,776	3,954	4,475	5,490	11.51%	13.60%	14.01%	15.33%	18.06%
Deferred income taxes	969	916	934	835	455	3.19%	3.30%	3.31%	2.86%	1.50%
Other noncurrent liabilities	1,644	1,596	1,607	1,906	1,937	5.41%	5.75%	5.69%	6.53%	6.37%
Total noncurrent liabilities	18,773	16,928	18,148	17,859	19,882	61.77%	60.97%	64.31%	61.19%	65.41%
Total liabilities	30,393	27,766	28,218	29,186	30,394	100.00%	100.00%	100.00%	100.00%	100.00%
Shareholders' investment						Percentages of equity items w.r.t total equity
Common stock	56	57	59	62	63	0.37%	0.37%	0.38%	0.40%	0.46%
Additional paid-in capital	3,385	3,345	3,311	2,919	2,762	22.41%	21.96%	21.38%	19.02%	20.14%
Retained earnings	12,213	12,398	12,698	12,947	11,443	80.85%	81.41%	81.99%	84.36%	83.45%
Accumulated other comprehensive loss	(548)	(570)	(581)	(581)	(556)
Total shareholders' investment	15,106	15,230	15,487	15,347	13,712	100.00%	100.00%	100.00%	100.00%	100.00%
Total liabilities and shareholders' investment	45,499	42,996	43,705	44,533	44,106
Common Stock, authorized shares (in shares)	675	689	6,000,000,000	6,000,000,000	6,000,000,000
Common stock, par value (in dollars per share)			0	0	0
Common Stock, shares issued (in shares)			704,038,218	744,644,454	752,712,464
Common Stock, shares outstanding (in shares)			704,038,218	744,644,454	752,712,464
Preferred stock, authorized shares (in shares)			5,000,000	5,000,000	5,000,000
Preferred stock, par value (in dollars per share)			0	0	0
Preferred stock, shares issued (in shares)			0	0	0
Preferred stock, shares outstanding (in shares)			0	0	0
Description and analysis:
Cash equivalents include highly liquid investments with an original maturity of three months or less from the time of purchase. Cash equivalents also include amounts due from third-party financial institutions for credit and debit card transactions. These receivables
typically settle in less than five days and were $313 million at January 29, 2011 and January 30, 2010. Payables due to Visa resulting from the use of Target Visa Cards are included within cash equivalents and were $36 million and $40 million at January 29, 2011 and
January 30, 2010 respecively. They managing the cash better than Walmart as there cash is just below 4% of the total asset dated 29 Jan 2011. This means that their funds are not kept idle cntinuously investing the cash into business operation to genrate revenue and
earn more income. Credit card receivables are recorded net of an allowance for doubtful accounts and are our only significant class of receivables. Substantially all accounts continue to accrue finance charges until they are written off. All past due accounts were
incurring finance charges at January 29, 2011 and January 30, 2010. Accounts are written off when they are 180 days past due. Target recievable are very high as compared to the Walmart, it may be due to the policy of Target to sell more on credit and giving customer
more days to pay them back, it may also reflect the negative sign that Target is not able to collect its recievable from customers and there might be high chances of bad debt. Substantially entire inventory and the related cost of sales are accounted for under the
retail inventory accounting method (RIM) using the last-in, first-out (LIFO) method. Inventory is stated at the lower of LIFO cost or market. Cost includes purchase price as reduced by vendor income. Inventory is also reduced for estimated losses related to shrink
and markdowns. The LIFO provision is calculated based on inventory levels, markup rates and internally measured retail price indices. Target's inventory is also lower as compared to the total assets in comparison to Walmart. Target is having 17.1% inventory of total assets
as on Jan 29, 2011. This shows that target is not increasing its sales as both the recievables and invenotry are stagnant over the last three years. Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is computed using the straight-line
method over estimated useful lives or lease terms if shorter. Firm amortize leasehold improvements purchased after the beginning of the initial lease term over the shorter of the assets' useful lives or a term that includes the original lease term, plus any renewals
that are reasonably assured at the date the leasehold improvements are acquired. Depreciation expense for 2010, 2009 and 2008 was $2,060 million, $1,999 million and $1,804 million, respectively. For income tax purposes, accelerated depreciation methods are
generally used. Repair and maintenance costs are expensed as incurred and were $726 million in 2010, $632 million in 2009 and $609 million in 2008. Facility pre-opening costs, including supplies and payroll, are expensed as incurred. Property and equipment item is
biggest on asset side as it is 58.33% of the total assets as on Jan 29, 2011. From 31 Jan 2009 till Jan 29, 2011 there is no increase in property and equipment which shows that company did not expand its operations within those three years. However it is increased by $3 billion
and reached to 62.5 % of total assests as the company has decided to start its international operations in Canada. Other non current assets include goodwill, intangible assets and company owned life insurance investments. Goodwill and intangible assets are recorded
within other noncurrent assets. Goodwill totaled $59 million at January 29, 2011 and January 30, 2010. Goodwill and indefinite-lived intangible assets are not amortized; instead, they are tested for impairment annually and whenever events or changes in circumstances
indicate the carrying value of the asset may not be recoverable. Definite-lived intangible assets are amortized over their expected economic useful life and are tested for impairment whenever events or changes in circumstances indicate the carrying value of the
asset may not be recoverable. Discounted cash flow models are used in determining fair value.Coming to the liabilities side of the balance sheet Accrued and other liabilities contains the following components:
a) Taxes payable consist of real estate, team member withholdings and sales tax liabilities.
b) Gift card liability represents the amount of gift cards that have been issued but have not been redeemed, net of estimated breakage.
c) Straight-line rent accrual represents the amount of rent expense recorded that exceeds cash payments remitted in connection with operating leases.
Account payable is 23.5% of total liablities as on 29 Jan 2011 in comparison to 30.86% of Walmart on the same date. This also shows that company is relatively getting less supplies on credit from suppliers, also they have places less inventory of the shelves.
In January 2011, Target entered into an agreement to purchase the leasehold interests in up to 220 sites in Canada currently operated by Zellers Inc., in exchange for C$1,825 million (Canadian dollars), due in two payments, one in May 2011 and one in September 2011.
This transaction will allow us to open 100 to 150 Target stores in Canada, primarily during 2013. Renovation of these stores will require an investment of over C$1 billion, a portion of which may be funded by landlords. At January 29, 2011 the value of C$1.00 approximated
the value of $1.00. Purchase obligations, which include all legally binding contracts, such as firm commitments for inventory purchases, merchandise royalties, equipment purchases, marketing-related contracts, software acquisition/license commitments and service
contracts, were approximately $1,907 million and $2,016 million at January 29, 2011 and January 30, 2010, respectively. We issue inventory purchase orders, which represent authorizations to purchase that are cancelable by their terms. We do not consider purchase orders to be firm inventory commitments. If we choose to cancel a purchase order, we may be obligated to reimburse the vendor for unrecoverable outlays incurred prior to cancellation. We also issue trade letters of credit in the ordinary course of business, which are not obligations given they are conditioned on terms of the letter of credit being met.
Purchase obligations, which include all legally binding contracts, such as firm commitments for inventory purchases, merchandise royalties, equipment purchases, marketing-related contracts, software acquisition/license commitments and service contracts, were
approximately $1,907 million and $2,016 million at January 29, 2011 and January 30, 2010, respectively. Target issue inventory purchase orders, which represent authorizations to purchase that are cancelable by their terms. Firm do not consider purchase orders to be
firm inventory commitments. If Target choose to cancel a purchase order, firm may be obligated to reimburse the vendor for unrecoverable outlays incurred prior to cancellation. Firm also issue trade letters of credit in the ordinary course of business, which are not
obligations given they are conditioned on terms of the letter of credit being met. Trade letters of credit totaled $1,522 million and $1,484 million at January 29, 2011 and January 30, 2010, respectively, a portion of which are reflected in accounts payable. Standby letters
of credit, relating primarily to retained risk on insurance claims, totaled $71 million and $72 million at January 29, 2011 and January 30, 2010, respectively.
Under Notes Payable and Long-Term Debt item firm obtain short-term financing throughout the year under commercial paper program, a form of notes payable. An additional source of
liquidity is available to firm through a committed $2 billion unsecured revolving credit facility obtained through a group of banks in April 2007, which will expire in April 2012. No balances were outstanding at any time during 2010 or 2009 under this credit facility.
In July 2010, company issued $1 billion of long-term debt at 3.875% that matures in July 2020. There were no amounts issued in 2009. Unsecured borrowing is the main source of funding the Target operations. As on Jul 30, 2011 these are 41.66% of the total liabilities
and hence the biggest liability item on the balance sheet of Target. Finally the retaining earning is the largest item on equity side which is 80.85% of the total equity and remaining is the surplus capital. Hence the asset of the company is mainly financed by long term
unsecured borrowings and retained earnings.
Though Target is competing in the retail business and reportedly the 2nd after Walmart but this balance sheet figures has shown some serious problems.From Jan 2009 to Jul 2011 there is not much increase in recievables as sales are also stagnant. Which is reflecting
a serious flaw in the strategy in Target. As in these last three year target did not go into expansion therefore they only retained the marketshare and did nothing to peneterate further. They also offered considerable less inventory as compared to Walmart on the
shelves and therfore the account payble is also on lower side. Other assets that include vendor income receivables, pharmacy receivable & income tax receivable, deferred taxes and other constitutes about 3.5% of the total assets.The main component of the asset
side is plant, propert and equipment which basically showing 1800 units of Target in USA. Almost of them are purchased by Target rather taken on lease. Target strategy has just
taken a shift and they wanted to commence their operations in Canada. Therefore in the last half year i.e. from 1Feb 2011 to 31 July 2011 their assets are increased to $1 billion. These operations are expected to start in 2013 therefore there is no affect of revenue
increase for the last half yearly and quarterly income statement as well.
In 2010 Retail Segment sales increased 3.7 percent over last year due to a 2.1 percent comparable-store increase combined with the contribution from new stores. Our Retail Segment EBITDA and EBIT increased 4.9 percent and 5.8 percent, respectively, compared
with the prior year. In the Credit Card Segment, we achieved a significant increase in segment profit primarily due to declining bad debt expense driven by improved trends in key measures of risk. Cash flow provided by operations was $5,271 million
,$5,881 million and $4,430 million for 2010, 2009 and 2008, respectively. Target only opened 13 new stores and 76 new stores in 2010 and 2009, respectively. In 2010 they have remodeled 341 stores, significantly more than the 67 stores we remodeled in 2009.
2010 and 2009 we repurchased 47.8 million and 9.9 million shares of our common stock for a total cash investment of $2,508 million ($52.44 per share) and $479 million ($48.54 per share), respectively.
In January 2011, they entered into an agreement to purchase the leasehold interests in up to 220 sites in Canada currently operated by Zellers Inc., in exchange for C$1,825 million (Canadian dollars), due in two payments, one in May 2011 and one in September 2011.
Additionally, in January 2011, Target announced their plan to actively pursue the sale of credit card receivables portfolio. As of January 29, 2011 the gross balance of credit card receivables portfolio was $6,843 million, of which $3,954 million was funded by third parties and $2,889 million was funded by Target.
To me the best balance sheet acurately shows the strategy f the firm. This balance sheet is showing the strategic flaw in Target'spolicy making as most of the figures are stagnant and that is actually what happening to target. Instead expanding the business they repurchased
their share of $6.3 billion in 2008, 2009 and 2010. They used whole the retained earning from net income to purchase these share rather expanding their business. However recently have increased their asset side by $1 billion as they are going to start in Canada
by 2013. This is clearly mentioned from Targets balance sheet of 30 Jul 2011 as the asset side is increase by $1.8 billion as compared to 29 Jan 2011 total asset figures that made an 4.1% rise in assets. Thereforeto me this is, if not best, then atleast close to best balance
sheet of Target as figure are speaking them self regarding the strategic policies of the Target's management.
Some calculations as an exercise from last lecture:
Price of Target stock	$52.66
EPS	$4.21
P/E (Price Erning Ratio)	12.51
Interpertation:	It will take 12.5 years to completely pay back the price of the entire stock.
Revenues: (Year ended Jan 29, 2011)	$67.40	(in billions)
Daily average sales	$0.19	(in billions)
Account recievables( Jan 31, 2011)	$6.15	(in billions)
Days in Account receivables, [Ac Receivables/ Daily Avg Sales]	32.85	Days
Interpertation:	It means that Walmart with having $67.40 billion revenue annually is not able to control its customers
	as it takes 32.85 days to recover the meager daily revenue of $0.19 billion in comparison to Walmart which
	is having daily revenue of $1.17 with recovery time of almost 5 days.
Items from Income Statement of (Year ended Jan 29, 2011)
Revenues: (Year ended Jan 29, 2011)	$67.40	(in billions)
Cost of goods sold	$45.70
Gross profit	$21.70
Percentage of gross profit to total revenues	32.20%
Interpertation	For each dollar sold Target abled to get the gross profit of 32 cents
Items from Income Statement of (Year ended Jan 29, 2011)	in Billion
Revenues: (Year ended Jan 29, 2011)	$67.40
Cost of goods sold	$45.70
Gross profit	$21.70
Operating expenses	$16.44
Operating Income	$5.26
Interest Expense	$0.76
Income Tax	$1.56
Net Income	$2.94
Distribution of gross profits in management	75.78%	This means that management is getting almost 76% of the gross profit in managing buisness operations of Target
Distribution of gross profits to bank	3.49%
Distribution of gross profits to government	7.19%
Distribution of gross profits to share holders	13.54%	Share holders get only 13.5% of the gross profit of Target
Sum of all distribution of gross profit	100.00%

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Target-Income Statement

TARGET Consolidated Statements of Income (Audited) (USD $)	6 Months Ended	12 Months Ended			Vertical Analysis				Horizontal Analysis
In Millions, except Per Share data	Jul. 30, 2011	Jan. 29, 2011	Jan. 30, 2010	Jan. 31, 2009	Jul. 30, 2011	Jan. 29, 2011	Jan. 30, 2010	Jan. 31, 2009	Jan. 29, 2011	Jan. 30, 2010	Jan. 31, 2009
Net sales	$31,475	$65,786	$63,435	$62,884	97.82%	97.62%	97.06%	96.82%	104.61%	100.88%	100.00%
Credit card revenue	700	1,604	1,922	2,064	2.18%	2.38%	2.94%	3.18%	77.71%	93.12%	100.00%
Revenues, total	32,175	67,390	65,357	64,948	100.00%	100.00%	100.00%	100.00%	103.76%	100.63%	100.00%
Cost of sales	21,710	45,725	44,062	44,157	67.47%	67.85%	67.42%	67.99%	103.55%	99.78%	100.00%
Gross margin	10,465	21,665	21,295	20,791	32.53%	32.15%	32.58%	32.01%	104.20%	102.42%	100.00%
Selling, general and administrative expenses	6,705	13,469	13,078	12,954	20.84%	19.99%	20.01%	19.95%	103.98%	100.96%	100.00%
Credit card expense	174	860	1,521	1,609	0.54%	1.28%	2.33%	2.48%	53.45%	94.53%	100.00%
Depreciation & amortization	1,022	2,084	2,023	1,826	3.18%	3.09%	3.10%	2.81%	114.13%	110.79%	100.00%
Total	7,901	16,413	16,622	16,389	24.56%	24.36%	25.43%	25.23%	100.15%	101.42%	100.00%
Operating income	2,564	5,252	4,673	4,402	7.97%	7.79%	7.15%	6.78%	119.31%	106.16%	100.00%
Interest:
Nonrecourse debt collateralized by credit card receivables	37	83	97	167	0.11%	0.12%	0.15%	0.26%	49.70%	58.08%	100.00%
Other interest expense	338	677	707	727	1.05%	1.00%	1.08%	1.12%	93.12%	97.25%	100.00%
Interest income	(1)	(3)	(3)	(28)					10.71%	10.71%	100.00%
Interest, net	374	757	801	866	1.16%	1.12%	1.23%	1.33%	87.41%	92.49%	100.00%
Income from continuing operations before income taxes	2,190	4,495	3,872	3,536	6.81%	6.67%	5.92%	5.44%	127.12%	109.50%	100.00%
Provision for income taxes	797	1,575	1,384	1,322	2.48%	2.34%	2.12%	2.04%	119.14%	104.69%	100.00%
Net earnings	1,393	2,920	2,488	2,214	4.33%	4.33%	3.81%	3.41%	131.89%	112.38%	100.00%
Basic earnings per share (in dollars per share)	$2.03	$4.03	$3.31	$2.87
Diluted earnings per share (in dollars per share)	$2.02	$4.00	$3.30	$2.86
							Outstanding Shares of Target (in millions)
Weighted-average number of common shares:						Net Income/ EPS	$724.57	$751.66	$771.43
Basic	687	724	752	770
Diluted	691	729	755	774
Revenues
Target's retail stores generally record revenue at the point of sale. Sales from our online business include shipping revenue and are recorded upon delivery to the guest. Total revenues do not include sales tax as company consider itself a pass-through conduit for
collecting and remitting sales taxes. Generally, guests may return merchandise within 90 days of purchase. Revenues are recognized net of expected returns, which is estimated using historical return patterns as a percentage of sales. Commissions earned on sales generated by leased
departments are included within sales and were $20 million in 2010, $18 million in 2009 and $19 million in 2008. Revenue from gift card sales is recognized upon gift card redemption. Gift cards do not have expiration dates. Based on historical redemption rates,
a small and relatively stable percentage of gift cards will never be redeemed, referred to as "breakage." Estimated breakage revenue is recognized over time in proportion to actual gift card redemptions and was not material in 2010, 2009 and 2008.
Credit card revenues are recognized according to the contractual provisions of each credit card agreement. When accounts are written off, uncollected finance charges and late fees are recorded as a reduction of credit card revenues. Target retail sales charged on our credit cards
totaled $3,455 million, $3,328 million and $3,948 million in 2010, 2009 and 2008, respectively. Beginning April 2010, all new qualified credit card applicants receive the Target Card, and company no longer issue the Target Visa to credit card applicants. Existing Target Visa
cardholders are not affected. Beginning October 2010, guests receive a 5 percent discount on virtually all purchases at checkout every day when they use a REDcard at any Target store or on Target.com. Target's REDcards include the Target Credit Card,
Target Visa Credit Card and Target Debit Card. This new REDcard Rewards program replaced the existing rewards program in which account holders received an initial 10 percent-off coupon for opening the account and earned points toward a 10 percent-off coupon
on subsequent purchases. These changes are intended to simplify the program and to generate profitable incremental retail sales. The discounts associated with REDcard Rewards program are included as reductions in sales in our Consolidated Statements of Operations.
and were $162 million in 2010, $94 million in 2009 and $114 million in 2008. This is a very important item based on which I have also done my vertical common size analysis. On Horizontal analysis I concluded that the revenuw has increased by 3% in 2011 in
comparison to 2009. However there was no significant rise in 2010.
Cost of Gooods Sold
Total cost of products sold including
• Freight expenses associated with moving merchandise from vendors to distribution centers and retail stores, and among distribution and retail facilities. Vendor income that is not reimbursement of specific, incremental and identifiable costs,
inventory shrink, markdowns, outbound shipping and handling expenses associated with sales to customers (GUESTS), payment term cash discounts, distribution center costs, including compensationand benefit costs. It actually means that how company control
customers and products outside the firm. CGS is relatively same in all three periods i.e. around 67% of total revenues. However they increased by 3.55% from 2009 in 2011. This rate of change is almost similar to that of Walmart. However the composition of CGS relative to
total revenue for Target is much better than Walmart. CSG of Walmart is around 74% of total revenue in 2011,2010 and 2009 however for Target its around 67%, which means that target is doing good in this componenet. However it is also possible that any expense item
that Walmart includes in its CGS is included by the Target in its selling and administration expense rather in CGS. That’s why I will also check the composition of the operatinh expense of the both companies.
Gross Margin
Target gross margin is increased by 2% in 2010 and by 4% in 2011 in comparison to 2009. Which is less than Walmart which is by 6% in 2011. However for every one dollar sold target save 32 cent in gross margin whereas walmart save only 25cents.
But this might be the expense classification issues as some of the expense that Walmart is categorizing in CGS may be catogerized by Target in administration and selling expenses. In absolute terms the gross margin for Target rised by $1 billion whereas for Walmart it rised
by $6 billion in 2011 from 2009 figures. This apparent rise of Walmart is mainly characterized by the expansion plan and for that of Target they are improving their stores according to the latest requirents of the retail industry.
Selling, general and administrative expenses:
Compensation and benefit costs including
• Stores, Headquarters, Occupancy and operating costs of retail and headquarters facilities Advertising, offset by vendor income that is a reimbursement of specific, incremental and identifiable costs. Pre-opening costs of stores and other facilities and
other administration costs. It is increased by $0.5 billion for target in 2011 from year ended Jan 2009. This means that this expense is increased by 3% from year 2009 in 2011.
Credit card and depreciation Expense.
Credit card expense is decreasing to half as the company has decided to stop the issuance of new credit cards, however the depreciation cost is increased by 14% in 2011 from 2009. The total operating cost including selling and adminstrative expenses, depreciation cost
and credit card cost constitutes about 24% of total revenue in year 2009, 2010 and 2011. For Walmart, in same period the selling and admin cost is around 19%. Hence Walmart off setting the affect of high CGS in comparison to Target's CSG.
Others:
Operating income of Target is 7.79% for the year ended Jan 2011. It means that for every dollar sold they save about 8 cents as operating income which will then be disctributed between Government as tax, bankers as interest and share holders as dividents & retained
earning. For walmart it is around 6% for the same period. Target has increasedits operating profit in 2011 by 19% in comparison to 2009. On other hand Walmart has raised its profits by 12%. It means that Target has done a good job to increase its operating profit.
Interest portion that has to be paid by Target is nominal and reflecting the stable figure over the period of last three years. However the main point to note is that firm has increased its net income by 32% in 2011 in comparison to 2009. For every dollar sold the save 4.33
cents for shareholders. However the net income for the same period for Walmart rised to 22% and they save 3.89 cents for every dollar they sell.
Analysis and whats the best income statement for the company:
2010 Retail Segment sales increased 3.7 percent over last year due to a 2.1 percent comparable-store increase combined with the contribution from new stores.Retail Segment EBITDA and EBIT increased 4.9 percent and 5.8 percent, respectively, compared with the prior year.
In the Credit Card Segment, Target achieved a significant increase in segment profit primarily due to declining bad debt expense driven by improved trends in key measures of risk. Cash flow provided by operations was $5,271 million, $5,881 million and $4,430 million for 2010
, 2009 and 2008, respectively. Firm opened 13 new stores and 76 new stores in 2010 and 2009, respectively. In 2010 company remodeled 341 stores, significantly more than the 67 stores it remodeled in 2009. Additionally, during 2010 and 2009 firm repurchased
47.8 million and 9.9 million shares of our common stock for a total cash investment of $2,508 million ($52.44 per share) and $479 million ($48.54 per share), respectively.In January 2011, firm entered into an agreement to purchase the leasehold interests in up to
220 sites in Canada currently operated by Zellers Inc., in exchange for C$1,825 million (Canadian dollars), due in two payments, one in May 2011 and one in September 2011. Company believes this transaction will allow us to open 100 to 150 Target stores in Canada,
primarily during 2013. Renovation of these stores will require an investment of over C$1 billion, a portion of which may be funded by landlords. At January 29, 2011 the value of C$1.00 approximated the value of $1.00.]
Additionally, in January 2011, firm announced our plan to actively pursue the sale of credit card receivables portfolio. As of January 29, 2011 the gross balance of credit card receivables portfolio was $6,843 million, of which $3,954 million was funded by third parties
and $2,889 million was funded by Target. Firm did not go into expansion earlier therefore there is not much revenue generation in absolute terms by the company, however with expansion in Canada they are likely to increase the revenue by acquiring more maret share in Canada.
They even repurchased the $6 billion worth shares which seems to be weared strategic decision by the Target management. The best income statement is that which reflect the business strategic plan of the firm and in my opinion for Target it is the best income statement
as it is reflecting the true strategy of the firm in last years. They did not go in to expansion and retained the business by offering good valued merchandise to the customers. Therefore the revenue did not drop neither increase substantially.
Some calculations as an exercise from last lecture:
(Year ended Jan 29, 2011)
Avg daily sales	$187.19	in millions
Inventory turnover in days	40.58	in days
Interpertation:	It means that Target will take 40.58 days to sell its existing inventory by converting them into final products (which in Target's case is already the final product)
	to the customers
Account recievable turnover in days	32.87	in days
Interpertation:	It means that it will take 32.87 days by Target to get the sales proceeds from its customers.
Operating cycle (Invetory turnover in days+ Account recievable in days)	73.45
Interpertation:	It means that Target will take 73.45 days to convert its inventory to final products in order to sell it to the customers and then waiting for
	proceed realization of sold merchandises. This time period is called the operation cycle of the firm.
Account Payable in days	35.39	in days
Interpertation:
Deficit / Surplus: (Operating cycle-Account Payable in days)	38.06	(Deficit if positive)
Interpertation:	It means that Walmart has to get funds for 38.06 days in the form of long term debt as this is the period of time for which Walmart remain
	short of the realization proceeds from its sales. This help will be provided by the banker and company will incur the interest over it.
	As the daily sales is around $187 million and firm will remain out of funds for 38.06 days, it means that Target require atleast $ 7124 Million
	to fund its operations and to increase its sales.

Walmart-Income Statement

Always start discussing Income statement first						See is there any major change in composition
WALMART Consolidated Statements of Income (Audited) (USD $)	6 Months Ended	12 Months Ended				Vetical commonsize Analysis Using Total Revenue				Horizontal commonsize Analysis using
In Millions, except Per Share data	Jul. 31, 2011	Jan. 31, 2011	Jan. 31, 2010	Jan. 31, 2009		as base figure				Year 2009 as base Year
						Jul. 31, 2011	Jan. 31, 2011	Jan. 31, 2010	Jan. 31, 2009	Jan. 31, 2011	Jan. 31, 2010	Jan. 31, 2009
Net sales	$212,053	$418,952	$405,132	$401,087		99.30%	99.31%	99.28%	99.22%	104.45%	101.01%	100.00%
Membership and other income	1,502	2,897	2,953	3,167		0.70%	0.69%	0.72%	0.78%	91.47%	93.24%	100.00%
Revenues, total	213,555	421,849	408,085	404,254	<==>	100.00%	100.00%	100.00%	100.00%	104.35%	100.95%	100.00%	<==	Always discuss even no change
Cost of sales	159,947	315,287	304,444	303,941	<==>	74.90%	74.74%	74.60%	75.19%	103.73%	100.17%	100.00%	<==	usually we discuss
Gross margin	53,608	106,562	103,641	100,313	<==>	25.10%	25.26%	25.40%	24.81%	106.23%	103.32%	100.00%
Operating, selling, general and administrative expenses	41,329	81,020	76,639	77,546		19.35%	19.21%	18.78%	19.18%	104.48%	98.83%	100.00%	<==	Always discuss
Operating income	12,279	25,542	27,002	22,767		5.75%	6.05%	6.62%	5.63%	112.19%	118.60%	100.00%	<==	Always discuss
Interest:					No reason to discuss
Debt	1016	1928	1,787	1,896		0.48%	0.46%	0.44%	0.47%	101.69%	94.25%	100.00%
Capital leases	146	277	278	288		0.07%	0.07%	0.07%	0.07%	96.18%	96.53%	100.00%
Interest income	(66)	(201)	(181)	(284)
Interest, net	1096	2004	1884	1900		0.51%	0.48%	0.46%	0.47%	105.47%	99.16%	100.00%
Income from continuing operations before income taxes	11,183	23,538	25,118	20,867		5.24%	5.58%	6.16%	5.16%	112.80%	120.37%	100.00%
Provision for income taxes:
Current	0	6703	7,643	6,564		0.00%	1.59%	1.87%	1.62%	102.12%	116.44%	100.00%
Deferred	0	876	-487	569		0.00%	0.21%	-0.12%	0.14%	153.95%	-85.59%	100.00%
Provision for income taxes, total	3668	7579	7156	7133		1.72%	1.80%	1.75%	1.76%	106.25%	100.32%	100.00%
Income from continuing operations	7,515	15,959	17,962	13,734		3.52%	3.78%	4.40%	3.40%	116.20%	130.78%	100.00%
Income (loss) from discontinued operations, net of tax	(28)	1,034	(79)	146		-0.01%	0.25%	-0.02%	0.04%	708.22%	-54.11%	100.00%
Consolidated net income	7,487	16,993	17,883	13,880		3.51%	4.03%	4.38%	3.43%	122.43%	128.84%	100.00%	<==	Always discuss
Less consolidated net income attributable to noncontrolling interest	(287)	(604)	(513)	(499)
Consolidated net income attributable to Walmart	7,200	16,389	17,370	13,381		3.37%	3.89%	4.26%	3.31%	122.48%	129.81%	100.00%
Basic net income per common share:
Basic income per common share from continuing operations attributable to Walmart	2.07	4.2	$3.74	$3.36
Basic income (loss) per common share from discontinued operations attributable to Walmart	0	0.28	($0.02)	$0.04			3902.1428571429
Basic net income per common share attributable to Walmart	$2.07	$4.48	$3.72	$3.40
Diluted net income per common share:
Diluted income per common share from continuing operations attributable to Walmart	2.06	4.18	$3.73	$3.35
Diluted income (loss) per common share from discontinued operations attributable to Walmart	0	0.29	($0.02)	$0.04
Diluted net income per common share attributable to Walmart	$2.06	$4.47	$3.71	$3.39
Weighted-average number of common shares:
Basic	3486	3656	3,866	3,939
Diluted	3501	3670	3,877	3,951
Dividends declared per common share	$1.46	$1.21	$1.09	$0.95
Description
Revenue Recognition
The Company recognizes sales revenue net of sales taxes and estimated sales returns at the time it sells merchandise to the customer. Customer purchases of shopping cards are not recognized as revenue until the card is redeemed and the customer purchases merchandise by
using the shopping card. The Company also recognizes revenue from service transactions at the time the service is performed. Generally, revenue from services is classified as a component of net sales on Walmart Consolidated Statements of Income. Due to the expansion policy
revenue of Walmart has increased by 4.3% from 2009.The income statements of international subsid- iaries are translated from the respective local currencies to the U.S. dollar using average exchange rates for the period covered by the income statements.
Related translation adjustments are recorded as a component of accumulated other comprehensive income (loss).
Sam’s Club Membership Fee Revenue Recognition
The Company recognizes Sam’s Club membership fee revenue both in the United States and internationally over the term of the membership, which is 12 months. Sam’s Club membership fee revenue is included in "membership and other income" in the revenues section of the
accompanying Consolidated Statements of Income. The deferred membership fee is included in accrued liabilities on the accompanying Consolidated Balance Sheet
Cost of Sales
Cost of sales includes actual product cost, the cost of transportation to the Company’s warehouses, stores and clubs from suppliers, the cost of transportation from the Company’s warehouses to the stores and clubs and the cost of warehousing for Sam’s Club segment
and import distribution centers. Cost of good sold is increased by 3.7% in 2011 in comparison to 2009. However CGS remains almost at 74% in comparison to total revenues in all the periods. The Gross Margin is increased by 6.2% from 2009 but in all years Walmart is saving
almost 25 cents from every dollars sold.
Operating, Selling, General and Administrative Expenses zubair ali raja: zubair ali raja: Walmart US & International distribution & Ware house cot is included in operating, selling, General & Adminsitration Expense, Whereas Sam's Club distribution & Ware house cost is included in CGS along with all kind of transportation cost regarding the invetories of all segments. Also the Organization cost is added in Operating, Selling, General and Administration Expenses.
Operating, selling, general and administrative expenses include all operating costs of the Company, except those costs related to the transportation of products from the supplier to the warehouses, stores or clubs, the costs related to the transportation of products
from the ware- houses to the stores or clubs and the cost of warehousing for Sam’s Club segment and import distribution centers. As a result, the majority of the cost of warehousing and occupancy for Walmart U.S. and Walmart International segments’ distribution
facilities is included in operating, selling, general and administrative expenses. As Walmart do not include most of the cost of Walmart U.S. and Walmart Interna- tional segments’ distribution facilities in cost of sales, gross profit and gross profit as a
percentage of net sales (our “gross profit margin”) may not be comparable to those of other retailers that may include all costs related to their distribution facilities in cost of sales and in the calculation of gross profit.
The costs of start-up activities, including organization costs, related to new store openings, store remodels, expansions and relocations are expensed as incurred and included in operating, selling, general and administrative expenses on
Consolidated Statements of Income. Pre-opening costs totaled $320 million, $227 million and $289 million for the years ended January 31, 2011, 2010 and 2009, respectively. Though this expense has increased by 5% in 2011 in comparison to 2010 but it stick to around 19%
of total revenues of all periods. In order to decrease the agency cost and to make the objectives of management aligned with that fo shareholders, a share base comepnsation is provided to the Walmart executives. As of January 31, 2011, the Company has awarded
share-based compensation to executives and other associates of the Company through various share-based compensation plans. The compensation cost recognized for all plans was $371 million, $335 million and $302 million for fiscal 2011, 2010 and 2009, respectively.
Virtually all of share-based compensation costs are classified as operating, selling, general and administrative expenses in the accompanying Consolidated Statements of Income. The total income tax benefit recognized for all share-based compensation plans
was $141 million, $126 million and $112 million for fiscal 2011, 2010 and 2009, respectively. In the fourth quarter of fiscal 2010, the Company announced several organizational changes, including the closure of 10 Sam’s Clubs, designed to strengthen and
streamline our operations. As a result, the Company recorded $260 million in pre-tax restructuring charges. The pre-tax restructuring charges of $260 million are classified in oper- ating, selling, general and administrative expenses on the
accompanying Consolidated Statement of Income for the fiscal year ended January 31, 2010.
Others
Walmart operating income increase by 18% in 2010and by 12% in 2011. In 2010 and 2011 firm has more 6% operating income with respect to total revenues. However for the half year closed on 31 Jul 2011 firm operating profit is 5.75%. It means that Walmat is
saving around 6 cents as operating income for every dollar sold to the customer. Now this 6 cent is further has to me divided among Bankers in the form of interest, Government in the form of tax and shareholders in the form of dividents or retained earnings.
The decrease of operating income change with respect to the figures of2009 from 18% in 2010 to 12% in 2011 is attributed to increase in operating expense which includes the organizational cost incurred in restructuring the Walmart operations.
Under a vertical commom size analysis most of the percentages are pretty much stable and there no substantial deviation in individual items of incomse statements with repect to the total revenues of respective years. However the net
earning attributed to Walmart in 2010 is highest in last three years i.e. 4.2%, which means that from every dollars sold the shareholders earning 4.2 cents. It fell down to 3.89 cents in 2011. Under Horizotal common size analysis the growth in the earning attributed to Walmart
is tremendous as it rised to 28% and 22% in 2010 and 1011 respectively from the figures of 2009. This shows that shareholders have good prospect in the company. Other items are pretty much simple as it inclused the debt interest which also includes the lease interest incurred.
The major deflection is in the deffered interest because the change in realizing the accounting for tax realization in 2010. The tax has flow through the income statement but not yet paid to tax auntorities. That’s why deffered tax has increased to 55% in 2011 as compared to 2009
under horizontal common size analysis.
Analysis & Whats the best income statement for my company:
Walmart operate in the highly competitive retail industry in all of the countries it serve. Company face strong sales competition from other discount, department, drug, variety and specialty stores, warehouse clubs, and supermarkets, many of which
are national, regional or international chains, as well as internet-based retailers and catalog businesses. Walmart compete with a number of companies for prime retail site locations, as well as in attracting and retaining quality employees (“associates”).
Along with other retail companies,firm is influenced by a number of factors including, but not limited to: general economic conditions, cost of goods, consumer disposable income, consumer debt levels and buying patterns, consumer credit availability, interest rates, customer
preferences, unemployment, labor costs, inflation, deflation, currency exchange fluctuations, fuel and energy prices, weather patterns, climate change, catastrophic events, competitive pressures and insurance costs. In order to grow management has decided to capture more
market share through expansion plan and to remain cost leader in the long run. The income statement is showing growth in revenue, gross margin and operating income. Which means that Business strategy of Walmart management is clearly and truly reflected in the figures of
company's balance sheet. So the income statement that truly reflects the business stragety of a firm is the best income statement for that firm. After doing theanalysis of my firm I have seen that figures in balance sheet and income statement are the mirror of my firm's strategy
therefore I consider this income statement as best for my company.
Some calculations as an exercise from last lecture:
Year ended Jan 31, 2011
Avg daily sales	$1,171.80	In Million
Inventory turnover in days	30.99	in days
Interpertation:	It means that Walmart will take 33days to sell it existing inventory by converting them into final products (which in walmarts case is already the final product)
	to the customers
Account recievable turnover in days	4.34	in days
Interpertation:	It means that it will take 4.34 days by Walmart to get the sales proceeds from its customers which is a very good time period
Operating cycle (Invetory turnover in days+ Account recievable in days)	35.34
Interpertation:	It means that Walmart will take 35.34 days to convert its inventory to final products in order to sell it to the customers and then waiting for
	proceed realization of sold merchandises. This time period is called the operation cycle of the firm.
Account Payable in days	28.64	in days
Interpertation:	It is the help provided by the suppliers to Walmart to increase its sales. This is the only component which will not cost the company
	to increase its sales. It a cushion to offset the time period of operating cycle of a firm.
Deficit / Surplus: (Operating cycle-Account Payable in days)	6.70	(Deficit if positive)
Interpertation:	It means that Walmart has to get funds for 6.7 days in the form of long term debt as this is the period of time for which Walmart remain
	short of the realization proceeds from its sales. This help will be provided by the banker and company will incur the interest over it.

Week 6- WM-IS BackEnd Analysis

WALMART Consolidated Statements of Income (Audited) (USD $)	6 Months Ended	12 Months Ended			Vetical commonsize Analysis Using Total Revenue				Horizontal commonsize Analysis using			Absolute Analysis
In Millions, except Per Share data	Jul. 31, 2011	Jan. 31, 2011	Jan. 31, 2010	Jan. 31, 2009	as base figure				Year 2009 as base Year
					Jul. 31, 2011	Jan. 31, 2011	Jan. 31, 2010	Jan. 31, 2009	Jan. 31, 2011	Jan. 31, 2010	Jan. 31, 2009	Jan. 31, 2011	Jan. 31, 2010	Jan. 31, 2009
Net sales	$212,053	$418,952	$405,132	$401,087	99.30%	99.31%	99.28%	99.22%	3.41% zubair ali raja: zubair ali raja: Walmart has increased its sales by 3.41% in FY ending Jan 2011 in comparison to FY ended 2010. It is basically due to global expansion and $4.5 billion increase in sales due to favorable exchange rate, net off 0.6% decline in sales of US compareable sales of US stores. Sales rise breakup is: WM-US: 0.1% increase WM-Intl: 12.1% increase Sam's club: 3.5% increase	1.01% zubair ali raja: zubair ali raja: This increase is due to higher customer traffic, global expansion and acquisition of Chilean subsidary (D&S) in Jan 2009, nett off $9.8 billion due to unfavorable exchange rate.	100.00%	$13,820	$4,045
Membership and other income	1,502	2,897	2,953	3,167	0.70%	0.69%	0.72%	0.78%	-1.90% zubair ali raja: zubair ali raja: It includes the Sam clubs member ship fee but main decline is owing to the other income which is not catogrized else where.	-6.76%	100.00%	($56)	($214)
Revenues, total	213,555	421,849	408,085	404,254	100.00%	100.00%	100.00%	100.00%	3.37%	0.95%	100.00%	$13,764	$3,831
Cost of sales	159,947	315,287	304,444	303,941	74.90%	74.74%	74.60%	75.19%	3.56% zubair ali raja: zubair ali raja: US and International Walmart has high margins, however Sam's club has lower margin to operate.	0.17%	100.00%	$10,843	$503
Gross margin	53,608	106,562	103,641	100,313	25.10%	25.26%	25.40%	24.81%	2.82% zubair ali raja: zubair ali raja: This increase is almost the same as for FY2010.	3.32%	100.00%	$2,921	$3,328
Operating, selling, general and administrative expenses	41,329	81,020	79,639	77,546	19.35%	19.21%	19.52%	19.18%	1.73% zubair ali raja: zubair ali raja: This is a very important component and it is decreased in comparison to previous year due to the following: a) Decrease in incentive plan b) Labor productivity c) Organizational changes to improve the operations.	2.70%	100.00%	$1,381	$2,093
Operating income	12,279	25,542	24,002	22,767	5.75%	6.05%	5.88%	5.63%	6.42% zubair ali raja: zubair ali raja: This increase in operating income is a good sign for Walmart. It is increased by 6.42 w.r.t the FY 2010. Its break is as under: WM-US: $ 19.9 billion WM-Intl: $5.6 billion Sam': 1.7 billion other: ($1.7billion) which is the loss that is considered corporate over head item and could not categorized any where else.	5.42%	100.00%	$1,540	$1,235
Interest:
Debt	1016	1928	1,787	1,896	0.48%	0.46%	0.44%	0.47%	7.89%	-5.75%	100.00%	$141	($109)
Capital leases	146	277	278	288	0.07%	0.07%	0.07%	0.07%	-0.36%	-3.47%	100.00%	($1)	($10)
Interest income	(66)	(201)	(181)	(284)					11.05% zubair ali raja: zubair ali raja: Interest expense is minute w.r.t to the total revenue in vertical analysis, however it has increased by 11% in 2011 from the previous year owing to the new expansion projects started by Walmart.	-36.27%		($20)	$103
Interest, net	1096	2004	1884	1900	0.51%	0.48%	0.46%	0.47%	6.37% zubair ali raja: zubair ali raja: This expense is due to the long term borrowing which is utilized for giving divident payments and capital expenditure of Walmart.	-0.84%	100.00%	$120	($16)
Income from continuing operations before income taxes	11,183	23,538	22,118	20,867	5.24%	5.58%	5.42%	5.16%	6.42%	6.00%	100.00%	$1,420	$1,251
Provision for income taxes:
Current	0	6703	7,643	6,564	0.00%	1.59%	1.87%	1.62%	-12.30%	16.44%	100.00%	($940)	$1,079
Deferred	0	876	-487	569	0.00%	0.21%	-0.12%	0.14%	-279.88% zubair ali raja: zubair ali raja: Under vertical analysis it’s a very minor component w.r.t total revenue. This component exists as the period for realizing the tax by the accounting system is different incomparison to that of taxation authority.	-185.59%	100.00%	$1,363	($1,056)
Provision for income taxes, total	3668	7579	7156	7133	1.72%	1.80%	1.75%	1.76%	5.91%	0.32%	100.00%	$423	$23
Income from continuing operations	7,515	15,959	14,962	13,734	3.52%	3.78%	3.67%	3.40%	6.66%	8.94%	100.00%	$997	$1,228
Income (loss) from discontinued operations, net of tax	(28)	1,034	(79)	146	-0.01%	0.25%	-0.02%	0.04%	-1408.86%	-154.11%	100.00%	$1,113	($225)
Consolidated net income	7,487	16,993	14,883	13,880	3.51%	4.03%	3.65%	3.43%	14.18%	7.23%	100.00%	$2,110	$1,003
Less consolidated net income attributable to noncontrolling interest	(287)	(604)	(513)	(499)					17.74%	2.81%		($91)	($14)
Consolidated net income attributable to Walmart	7,200	16,389	14,370	13,381	3.37%	3.89%	3.52%	3.31%	14.05% zubair ali raja: zubair ali raja: This is a very good sign for Walmart. This shows that how net change in sales affects net change in profits. Due to this Walmart has announced to increase the dividents for share holders by 21% i.e. from $1.21 peshare to 1.46 per shares.	7.39%	100.00%	$2,019	$989
Basic net income per common share:
Basic income per common share from continuing operations attributable to Walmart	2.07	4.2	$3.74	$3.36
Basic income (loss) per common share from discontinued operations attributable to Walmart	0	0.28	($0.02)	$0.04
Basic net income per common share attributable to Walmart	$2.07	$4.48	$3.72	$3.40
Diluted net income per common share:
Diluted income per common share from continuing operations attributable to Walmart	2.06	4.18	$3.73	$3.35
Diluted income (loss) per common share from discontinued operations attributable to Walmart	0	0.29	($0.02)	$0.04
Diluted net income per common share attributable to Walmart	$2.06	$4.47	$3.71	$3.39
Weighted-average number of common shares:
Basic	3486	3656	3,866	3,939
Diluted	3501	3670	3,877	3,951
Dividends declared per common share	$1.46	$1.21	$1.09	$0.95
Description of BackEnd Analysis of Walmart's Income Statement:
Walmart is basically capitlizing on its strategy of expansion to attain more market share. It is clearly reflected through its income statement. In fiscal year ended Jan 2011 its sales is increased by 3.4% in comparison to the last year i.e. FY ended 2010. Cost of good also
increased in the same period by 3.56% whereas in 2010 it was not increased in comparison to the increase of 1% sales in 2010 from the year 2009. This rise in sales and Cost of goods sold are attributed to the expnasion policy of the Walmart both with US and particularly
in international operations. Cost of good sold are about 74% to 75% with respect to total revenues in all three years i.e. 2009, 2010 and 2011. Gross margin is also increased by almost 3% in both 2010 and 2011 with respect to the goss margins of immediate previous years.
The average gross margin that Walmart makes is around 25% of the total revenue that they have made in last three years(individualy). Operating and selling expense is also stable for walmart and is around 19% in each year with respect to (W.R.T) total revenues. This expense
is also increased in FY ended 2011 by 1.73% in comparison to the last years figure i.e. 2010. The main this to notice is that the operating income that has to be distributed among government, bankers and shareholders has been increased in FY 2011 by 6.42% which
was increased 6 percent in 2010 from 2009 figures which shows that the stragety of the Walmart is going perfect as far as the expansion is concerned. Walmart has decreased the growth rate of operating expense in relation to the increase in net sales.
However the figures of operating income are stable in vertical analysis. Walmart's operating income is around 5-6% of the total revenue which means that for each dollar sold their operating income is aroung 5 to 6 cents. Which increased by $ 4.2 billion in 2010 incomparison
to the figures of FY ended Jan 2009. Debt of the walmart is increased by 8% in 2011 in comparison to the previous year. However debt is in very minute percentage to the total revenue and rests at 0.4% w.r.t total revenues. Liquidity requirements for the purchase of inventory
and other operational expenses are covered by the cash flows from operation and short term borrowing. However long term boroowing is used for capital expenditures and dividend payments. Therfore this interest expense is increased in FY2011 in comparison to FY 2010.
Finally the most important change is 14% increase in net income of Walmart. Due to this management has increased the EPS by 21% in FY2012 from $1.21 to $1.46. The same increase in 2010 was 7% which shows that the strategy of expansion is truly reflecting the figures
of Walmart's Balance sheet. Net earnings of the company is also increased w.r.t the total revenue and has reached at 3.89% in FY 2011 in comparison to 3.52% in FY 2010. Therefore Walmarts Income statement is reflecting the strategy of the management in true sense.
Conclusion of Back End Analysis and main changes in Income Statement of Walmart:
1) Sales increased by 3.41% in 2011 and 1% 2010. In absolute terms sales are increased by $13.8 billions. Main reasons are global expansion and $4.5 billion contribution in sales owing to favorable exchange rate net off 6% decline in sales in US comparable stores. zubair ali raja: zubair ali raja: Walmart US & International distribution & Ware house cot is included in operating, selling, General & Adminsitration Expense, Whereas Sam's Club distribution & Ware house cost is included in CGS along with all kind of transportation cost regarding the invetories of all segments. Also the Organization cost is added in Operating, Selling, General and Administration Expenses.
2) Cost of goods increased in 2011 to 3.56% owing to the increase in net sales. Zubair Raja: Zubair Raja: nothing abnormal, as it expects to increase with sales
3) Operating expense is increased by 1.73% in FY 2011 which was 2.27% in FY 2010 due to labor productivity, organizational changes in FY 2010 and decrease in incentive plans.
4) Interest expense increased to 6.37% due to the long term borrowing of Walmart for Capital expense and divident payment. Zubair Raja: Zubair Raja: not important to discuss
									zubair ali raja: zubair ali raja: This is a very good sign for Walmart. This shows that how net change in sales affects net change in profits. Due to this Walmart has announced to increase the dividents for share holders by 21% i.e. from $1.21 peshare to 1.46 per shares.	zubair ali raja: zubair ali raja: Walmart has increased its sales by 3.41% in FY ending Jan 2011 in comparison to FY ended 2010. It is basically due to global expansion and $4.5 billion increase in sales due to favorable exchange rate, net off 0.6% decline in sales of US compareable sales of US stores. Sales rise breakup is: WM-US: 0.1% increase WM-Intl: 12.1% increase Sam's club: 3.5% increase	zubair ali raja: zubair ali raja: This increase is due to higher customer traffic, global expansion and acquisition of Chilean subsidary (D&S) in Jan 2009, nett off $9.8 billion due to unfavorable exchange rate.	zubair ali raja: zubair ali raja: It includes the Sam clubs member ship fee but main decline is owing to the other income which is not catogrized else where.	zubair ali raja: zubair ali raja: US and International Walmart has high margins, however Sam's club has lower margin to operate.	zubair ali raja: zubair ali raja: This increase is almost the same as for FY2010.	zubair ali raja: zubair ali raja: This is a very important component and it is decreased in comparison to previous year due to the following: a) Decrease in incentive plan b) Labor productivity c) Organizational changes to improve the operations.	zubair ali raja: zubair ali raja: This increase in operating income is a good sign for Walmart. It is increased by 6.42 w.r.t the FY 2010. Its break is as under: WM-US: $ 19.9 billion WM-Intl: $5.6 billion Sam': 1.7 billion other: ($1.7billion) which is the loss that is considered corporate over head item and could not categorized any where else.	zubair ali raja: zubair ali raja: Interest expense is minute w.r.t to the total revenue in vertical analysis, however it has increased by 11% in 2011 from the previous year owing to the new expansion projects started by Walmart.	zubair ali raja: zubair ali raja: This expense is due to the long term borrowing which is utilized for giving divident payments and capital expenditure of Walmart.	zubair ali raja: zubair ali raja: Under vertical analysis it’s a very minor component w.r.t total revenue. This component exists as the period for realizing the tax by the accounting system is different incomparison to that of taxation authority.	5) Net income of the company is increased by 14% in FY 2011 which was increased by 7% in FY 2010. Due to this positive change managemnt announced to rise the dividend by 25cents which is a raise of 21%.
Walmart management's main aim was to increase the sales and to increase the operating profit with higher growth rate and increase operating expense with slower growth rate in comparison to the growth rate of sale which is achieved in FY 2011.
Overall the components of the income statement in comparison to the total revenues in the same year looks stable and there is no big or drastic change appearing under vertical analysis of the Income statements of the Walmart.
In my personal view this income statement is truly reflecting the strategy of expansion by the Walmart's management as all the required components are showing positive variance with increased sales and expansion policy of the firm.
	$1,171.80	In Million
	30.99	in days
	It means that Walmart will take 33days to sell it existing inventory by converting them into final products (which in walmarts case is already the final product)
	to the customers
	4.34	in days
	It means that it will take 4.34 days by Walmart to get the sales proceeds from its customers which is a very good time period
	35.34
	It means that Walmart will take 35.34 days to convert its inventory to final products in order to sell it to the customers and then waiting for
	proceed realization of sold merchandises. This time period is called the operation cycle of the firm.
	28.64	in days
	It is the help provided by the suppliers to Walmart to increase its sales. This is the only component which will not cost the company
	to increase its sales. It a cushion to offset the time period of operating cycle of a firm.
	6.70	(Deficit if positive)
	It means that Walmart has to get funds for 6.7 days in the form of long term debt as this is the period of time for which Walmart remain
	short of the realization proceeds from its sales. This help will be provided by the banker and company will incur the interest over it.

Week6-WM-BS BackEnd Analysis

WAL-MART Statement Of Financial Position Classified - Audited (USD $)	Q2, 2011	Q1, 2011	12 Months Ended			Vertical Analysis			Horizontal Analysis
In Millions	Jul. 31, 2011	Apr. 30, 2011	Jan. 31, 2011	Jan. 31, 2010	Jan. 31, 2009	Jan. 31, 2011	Jan. 31, 2010	Jan. 31, 2009	Jan. 31, 2011	Jan. 31, 2010	Jan. 31, 2009	Jan. 31, 2011	Jan. 31, 2010	Jan. 31, 2009
Assets
Current assets:
Cash and cash equivalents	8,102	9,400	7,395	7,907	7,275	4.09%	4.63%	4.45%	-6.48% zubair ali raja: zubair ali raja: This decrease in cash flow is due to the higher invetments in the inventories. P20	8.69% zubair ali raja: zubair ali raja: This year the inventory level decreased by -3.91% in comparison to last yeardue to which cash from operating activities reached at the highest level of $26.2 billion. Owing to this cash in hand was increased. P23	100%	(512)	632		<== discuss cash
Receivables, net	5,265	4,785	5,089	4,144	3,905	2.82% zubair ali raja: zubair ali raja: Though Walmart is increasing sales but account recievables are very well cotrolled by the Walmart. They are quickly collecting their recievables which shows their good collection policy.	2.43%	2.39%	22.80% zubair ali raja: zubair ali raja: Due to increase in sale by 3.4% in FY 2011, recievables are increased by 22.8%.	6.12% zubair ali raja: zubair ali raja: Due to the increase in sale by 1% , recievables have increased by 6.12%	100%	945	239		<== expect them to increase if sales are increasing but it should increase at par or lower than increase in sales
Inventories	38,651	38,335	36,318	33,160	34,511	20.10% zubair ali raja: zubair ali raja: Due to the nature of Walmart's business, Inventory is one of the major component of the total assets.	19.43%	21.12%	9.52% zubair ali raja: zubair ali raja: Increase of 3.4% sales is the reason of increase in inventory. Moreover much cash was invested in inventory in FY2011 due to which cash decreased by 6.48%	-3.91% zubair ali raja: zubair ali raja: Inventory level was decreased and therfore Walmart has high cash in hand in FY2010 i.e. increase by 8.69% in comparison to FY2009.. Due to this the cash flow from the operating activity reach the highest level of $26.2 billion.	100%	3,158	(1,351)		<== also linked with sales and cash
Prepaid expenses and other Zubair Raja: Zubair Raja: usually not important to discuss, specially when it is of small % of total assets						zubair ali raja: zubair ali raja: Though Walmart is increasing sales but account recievables are very well cotrolled by the Walmart. They are quickly collecting their recievables which shows their good collection policy.	zubair ali raja: zubair ali raja: Due to the nature of Walmart's business, Inventory is one of the major component of the total assets.			zubair ali raja: zubair ali raja: This decrease in cash flow is due to the higher invetments in the inventories. P20	zubair ali raja: zubair ali raja: This year the inventory level decreased by -3.91% in comparison to last yeardue to which cash from operating activities reached at the highest level of $26.2 billion. Owing to this cash in hand was increased. P23	zubair ali raja: zubair ali raja: Due to increase in sale by 3.4% in FY 2011, recievables are increased by 22.8%.	zubair ali raja: zubair ali raja: Due to the increase in sale by 1% , recievables have increased by 6.12%	zubair ali raja: zubair ali raja: Increase of 3.4% sales is the reason of increase in inventory. Moreover much cash was invested in inventory in FY2011 due to which cash decreased by 6.48%	zubair ali raja: zubair ali raja: Inventory level was decreased and therfore Walmart has high cash in hand in FY2010 i.e. increase by 8.69% in comparison to FY2009.. Due to this the cash flow from the operating activity reach the highest level of $26.2 billion.	3,308	3,330	2,960	2,980	3,063	1.64%	1.75%	1.87%	-0.67%	-2.71%	100%	(20)	(83)
Current assets of discontinued operations	88	108	131	140	195	0.07%	0.08%	0.12%	-6.43%	-28.21%	100%	(9)	(55)
Total current assets	55,414	55,958	51,893	48,331	48,949	28.72%	28.31%	29.95%	7.37% zubair ali raja: zubair ali raja: This increase in current assets are primarily due to increase in account recievables.	-1.26%	100%	3,562	(618)
Long Term Assets
Property and equipment:
Land			24,386	22,591	19,852	13.50%	13.23%	12.15%	7.95%	13.80%	100%	1,795	2,739
Buildings and improvements			79,051	77,452	73,810	43.76%	45.37%	45.16%	2.06%	4.93%	100%	1,599	3,642
Fixtures and equipment			38,290	35,450	29,851	21.19%	20.77%	18.27%	8.01%	18.76%	100%	2,840	5,599
Transportation equipment			2,595	2,355	2,307	1.44%	1.38%	1.41%	10.19%	2.08%	100%	240	48
Construction in process	zubair ali raja: zubair ali raja: Walmart did not provide breakup of its property and equipment for the Quarter 1 of 2001								zubair ali raja: zubair ali raja: This increase in current assets are primarily due to increase in account recievables.	zubair ali raja: zubair ali raja: Walmart did not provide breakup of its property and equipment for the Quarter 1 of 2001	4,262			2.36%
Property and equipment(Sub)	153,985	151,766	148,584	137,848	125,820	82.24%	80.75%	76.99%	7.79%	9.56%	100%	10,736	12,028
Less accumulated depreciation	(45,256)	(45,473)	(43,486)	(38,304)	(32,964)				13.53%	16.20%	100%	(5,182)	(5,340)
Property and equipment, NET	108,729	106,293	105,098	99,544	92,856	58.17% zubair ali raja: zubair ali raja: Due to the nature of business Walmart has high portion of PPE w.r.t total assets of the company.	58.31%	56.82%	5.58% zubair ali raja: zubair ali raja: As a part of the strategy, Walmart is inclreasing its sales through expanding its operations both in US and outside US. Therefore its PPE is increasing , though in FY2011 it increase by 5.58% which was almost 7% in FY10	7.20% zubair ali raja: zubair ali raja: This is due to the global expansion of Walmart. In FY2010 they went for the acquisition of Chilean Subsidary (D&S).	100%	5,554	6,688		<=== usually we discuss
Property under capital leases:
Property under capital leases	6,102	6,064	5,905	5,669	5,341	3.27%	3.32%	3.27%	4.16%	6.14%	100%	236	328
Less accumulated amortization	(3,241)	(3,213)	(3,125)	(2,906)	(2,544)				7.54%	14.23%	100%	(219)	(362)
Property under capital leases, NET	2,861	2,851	2,780	2,763	2,797	1.54%	1.62%	1.71%	0.62%	-1.22%	100%	17	(34)
Goodwill	21,532	16,895	16,763	16,126	15,260	9.28% zubair ali raja: zubair ali raja: It is a major component of the balance sheet as it contitutues about 9-10% of the total assets of Walmart.	9.45%	9.34%	3.95% zubair ali raja: zubair ali raja: Walmart is acquiring other small retailers especially outside U.S.	5.67%	100%	637	866		<== important to discuss usually it gives idea how aggressively a company is acquiring other firms
Other assets and deferred charges	5,120	4,068	4,129	3,942	3,567	2.53%	2.41%	2.18%	4.74%	10.51%	100%	187	375
Total long term assets	138,242	130,107	128,770	122,375	114,480	71.28% zubair ali raja: zubair ali raja: Long term assets are larger in percentage w.r.t total assets. This is mainly due to PPE and Goodwill component.			zubair ali raja: zubair ali raja: Walmart is acquiring other small retailers especially outside U.S.	71.69%	70.05%	5.23%	6.90%	100%	6,395	7,895
Total assets	193,656	186,065	180,663	170,706	163,429	100.00%	100.00%	100.00%	5.83%	4.45%	100%	9,957	7,277		<== always discuss
Liabilities and shareholders' investment
Current liabilities:
Short-term borrowings	6,435	3,451	1,031	523	1,506	0.57%	0.31%	0.92%	97.13% zubair ali raja: zubair ali raja: Due to less cash and high investment required in inventory, short term borrowing was required. As it can be clearly checked that cash decreased by 6.48% and inventory increased by 9.52%	-65.27% zubair ali raja: zubair ali raja: Due to high cash and less investment in inventory this component decreased by 65%.	100%	508	(983)
Accounts payable	34,701	34,321	33,557	30,451	28,849	18.57% zubair ali raja: zubair ali raja: It is a big portion of the total assets because of the nature of the business and the fact that Walmart is increasing its sales and getting inventories from suppliers on credit. Therefore these suppliers giving cushion to Walmart to increase its sales without any further cost.			zubair ali raja: zubair ali raja: Due to less cash and high investment required in inventory, short term borrowing was required. As it can be clearly checked that cash decreased by 6.48% and inventory increased by 9.52%	17.84%	17.65%	10.20% zubair ali raja: zubair ali raja: Due to the increase in sale by 3.4% this component increased by 10% in FY2011	5.55% zubair ali raja: zubair ali raja: As here the sales increased by 1% therefore the accounts payable also increased.	100%	3,106	1,602		<== Awalys discuss as it is directly linked with the sales
Divident payable	2,556	3,828				0.00%	0.00%	0.00%
Accrued liabilities	17,815	15,962	18,701	18,734	18,112	10.35% zubair ali raja: zubair ali raja: It is a big portion of total liabilities and equity and consist of following : A) Accrued wages and benefits:- $5.9 billion b) Self-insurance:- $3.4 billion c) others:- 9.4 billion P 40				zubair ali raja: zubair ali raja: Due to high cash and less investment in inventory this component decreased by 65%.	zubair ali raja: zubair ali raja: Due to the increase in sale by 3.4% this component increased by 10% in FY2011	zubair ali raja: zubair ali raja: As here the sales increased by 1% therefore the accounts payable also increased.	10.97%	11.08%	-0.18%	3.43%	100%	(33)	622		<== discuss if more than 7% of assets
Accrued income taxes	898	927	157	1,365	677	0.09%	0.80%	0.41%	-88.50%	101.62%	100%	(1,208)	688
Long-term debt due within one year	1,787	3,173	4,655	4,050	5,848	2.58%	2.37%	3.58%	14.94%	-30.75%	100%	605	(1,798)
Obligations under capital leases due within one year	404	345	336	346	315	0.19%	0.20%	0.19%	-2.89%	9.84%	100%	(10)	31
Current liabilities of discontinued operations	28	44	47	92	83	0.03%	0.05%	0.05%	-48.91%	10.84%	100%	(45)	9
Total current liabilities	64,624	62,051	58,484	55,561	55,390	32.37%	32.55%	33.89%	5.26%	0.31%	100%	2,923	171
Long Term Liabilities:
Long-term debt	45,238	45,486	40,692	33,231	31,349	22.52% zubair ali raja: zubair ali raja: As Walmart is going into expansion therefore long term debt are the major portion of total liablity and equity.	19.47%	19.18%	22.45% zubair ali raja: zubair ali raja: To meet the expansion needs long term debt increased by 23% in FY 2011	6.00%	100%	7,461	1,882
Long-term obligations under capital leases	3,214	3,211	3,150	3,170	3,200	1.74%	1.86%	1.96%	-0.63%	-0.94%	100%	(20)	(30)
Deferred income taxes and other	7,304	6,902	6,682	5,508	6,014	3.70%	3.23%	3.68%	21.31%	-8.41%	100%	1,174	(506)
Redeemable noncontrolling interest	428	423	408	307	397	0.23%	0.18%	0.24%	32.90%	-22.67%	100%	101	(90)
Total long term liabilities	56,184	56,022	50,932	42,216	40,960	28.19%	24.73%	25.06%	20.65%	3.07%	100%	8,716	1,256
Total liablities (Short and long term)	120,808	118,073	109,416	97,777	96,350	60.56%	57.28%	58.96%	11.90% zubair ali raja: zubair ali raja: Total liabilities increased by 11.9% mainly due to accounts payable andlong term debt. Accrued liabilities almost remained the same.	1.48%	100%	11,639	1,427		<=== discuss
Equity:
Preferred stock ($0.10 par value; 100 shares authorized, none issued)	0	0	0	0	0
Common stock ($0.10 par value; 11,000 shares authorized, 3,786 and 3,925 issued and outstanding at January 31, 2010 and January 31, 2009, respectively)	352	352	352	378	393	0.19%	0.22%	0.24%	-6.88%	-3.82%	100%	(26)	(15)
Capital in excess of par value	3,524	3,446	3,577	3,803	3,920	1.98%	2.23%	2.40%	-5.94%	-2.98%	100%	(226)	(117)
Retained earnings	62,779	60,330	63,967	66,638	63,660	35.41% zubair ali raja: zubair ali raja: Retained earning is the biggest portion of equity and total liability. This is accumulated owing to continuous profitable operations of Walmart years after years.	39.04%	38.95%	-4.01%	4.68%	100%	(2,671)	2,978		<== Always discuss
Accumulated other comprehensive loss	1,286	878	646	(70)	(2,688)	0.36%	-0.04%	-1.64%	-1022.86%	-97.40%	100%	716	2,618
Total Walmart shareholders' equity	67,941	65,006	68,542	70,749	65,285	37.94%	41.44%	39.95%	-3.12%	8.37%	100%	(2,207)	5,464
Noncontrolling interest	4,907	2,986	2,705	2,180	1,794	1.50%	1.28%	1.10%	24.08%	21.52%	100%	525	386
Total equity	72,848	67,992	71,247	72,929	67,079	39.44%	42.72%	41.04%	-2.31%	8.72%	100%	(1,682)	5,850
Total liabilities and equity	193,656	186,065	180,663	170,706	163,429	100.00%	100.00%	100.00%	5.83%	4.45%	100%	9,957	7,277
Description:
Under vertical analysis the situation of the balance sheet of walmart is almost the same as that of walmart's income statement. All the figures are very much stable except for long term liability which has increased to 28.19% of total assets in FY 2011.
In FY 2010 it was 24.73% w.r.t total assets. Moeover in FY2011 share holder equity went down to 39.44% of total assets.This means that for each 1 dollar of asset, shareholders are owing 39.44 cents of that asset.In FY 2010 shareholders were
owing 42.72 cents from each dollar asset. In FY 2011 the cash in decreased to -6.28% in comparison to FY 2010 because much was invested in inventories. In FY 2010 due to less inventory level and high cash flow from operating activities cash was increased by
8.69% in comparison to FY2009. Account recievable was increased by 6% and 22% in FY 2010 and FY 2011 which is obiviously due to increase in sales. As recievables are the mirror of sales therefore due to increase in sale, account recievables also went up.
Inventories decreased in FY2010 because cash was not much invested in the form of inventories that year. In FY2011 most of the cash was invested in the form of inventories due to which it went up by 9.52%. Total current assets
in FY 2011 went high by 7% mainly due to the increase in account recievable which is du to the increase in sales in the same year. The biggest portion of the total assets are plant, property and equipment (PPE). PPE is about 58.17%,
58.31% and 56.82% in FY 2011, 2010 and 2010 respectively. In FY2010 and FY2011 , PPE is increased by 7% and 5.8% respectively which clearly reflects the intension of the Walmart that they are into expansion both in and outside U.S.
Goodwill is also an major component of total assets and it is almost 9 to 10% of the total asset in each of three fiscal years. Goodwill is also increased in FY2011 by 4% and in FY2010 by 5.67%. This shows that Walmart is acquiring
other small retailers specially outside United States. Now coming to the liabilities and equity side, we have four main items which constitue more than 80% of the total liabilities and equity (L&E). These are account payable which is about 19%
for FY 2011, accounts payable which is 10.35%, long term debt which 22.52% and retained earnings which is 35.41% of L&E in FY 2011. These four component makes up 87% of the L&E. From hotizontal analysis
we come to know that short term borrowing decreased in FY2010 because of less investment in inventories and high cash in hand owing to high cash flow from operating activities of Walmart. In FY 2011 the short term borrowing was
increased by 97% from the last year i.e. FY2010 due to need to purchase inventory and less cash in hand. Account payable also increased by 10% in FY 2011 due to increase in sales by 3.4%. Long term liability increased
by 22.52% in FY2011 due to expansion of Walmart, accrued liabilities almost remained the same and retained earning decreased by 4% in FY 2011.
Conclusion and main changes identified in Balance Sheet of Walmart:-
1) Cash and cash equivalents almost 4% of the total assets. It is decreased by 6.48% in FY2011 due to high investment in inventories. The same was increased by 8.69% due to better cash flow generated and less investment in inventory.
2) Ac Recievables are almost 3% of the total assets. It increased by 22.8% in FY2011 due to increase in net sales by 3.4%. In 2010 it was increased by 6.12% due to increase in sales by 1%.
3) Invetories are almost 20% of total assets. They increased by 9.52% as it is also related to the increase in sale of Walmart. With high sales management ensured that they must have all the variety of merchandise on the shelves of their store.
4) PPE is almost 58% of the total assets and is the biggest component in balance sheet w.r.t total assets. As walmart strategy is to go into expansion, this components is also increased by 5.6% in FY2011.
5) Goodwill in about 10% of the total assets. Due to expansion Walmart is also acquiring the competing retailers especially outside USA. Due to the this components is also increased by 5.7% and 4% in FY2010 and FY2011 respectively
6) On liability side account payable are 19% of the total liabilities and equity (L&E). It is increase in FY2011 by 10% du to increase in sales.
7) Short term borrowing is below 1% of L&E but it has increased by 97% in FY 2011 due to the high financing requirments for inventory purchase.
8) Accrued liabilities are 10% of the L&E but there is no much change in this component as compared to previous years.
9) Long term debt is 22.52 percent of L&E and due to the expansion of Walmart it is increased in FY2011 by 22%.
10) Retained earning is 35.41 of the L&E and it is decreased by 4 percent in FY2011 showing that firm has increased the dividends and swaping this paid portion with long term debt which has already increased by 22% in FY2011.
In my personal view this balance sheet is truly reflecting the strategy of expansion by the Walmart's management as all the required components are showing positive variance with increased sales and expansion policy of the firm.

Notes

	Walmart vs. Target
Walmart		Target
Backend Analysis:		Backend Analysis:

Week 6-TGT-IS BackEnd Analysis

TARGET Consolidated Statements of Income (Audited) (USD $)	6 Months Ended	12 Months Ended			Vertical Analysis				Horizontal Analysis			Absolute Analysis
In Millions, except Per Share data	Jul. 30, 2011	Jan. 29, 2011	Jan. 30, 2010	Jan. 31, 2009	Jul. 30, 2011	Jan. 29, 2011	Jan. 30, 2010	Jan. 31, 2009	Jan. 29, 2011	Jan. 30, 2010	Jan. 31, 2009	Jan. 29, 2011	Jan. 30, 2010	Jan. 31, 2009
Net sales	$31,475	$65,786	$63,435	$62,884	97.82%	97.62%	97.06%	96.82%	3.71% zubair ali raja: zubair ali raja: Sales increased by 3.7% due to remodeling of 341 target stores in FY2011 and opening of almost 70 stores in FY2010.	0.88%	100.00%	$2,351	$551
Credit card revenue	700	1,604	1,922	2,064	2.18%	2.38%	2.94%	3.18%	-16.55% zubair ali raja: zubair ali raja: Abandon the issuance of REDVisa Crad of Target.	-6.88%	100.00%	($318)	($142)
Revenues, total	32,175	67,390	65,357	64,948	100.00%	100.00%	100.00%	100.00%	3.11%	0.63%	100.00%	$2,033	$409
Cost of sales zubair ali raja: zubair ali raja: Total cost of products sold including • Freight expenses associated with moving merchandise from our vendors to our distribution centers and our retail stores, and among our distribution and retail facilities • Vendor income that is not reimbursement of specific, incremental and identifiable costs Inventory shrink Markdowns Outbound shipping and handling expenses associated with sales to our guests Payment term cash discounts Distribution center costs, including compensation and benefits costs	21,710	45,725	44,062	44,157	67.47%	67.85%	67.42%	67.99%	3.77% zubair ali raja: zubair ali raja: Due to increase in net sales by 3.71%	-0.22%	100.00%	$1,663	($95)
Gross margin	10,465	21,665	21,295	20,791	32.53%	32.15%	32.58%	32.01%	1.74%	2.42%	100.00%	$370	$504
Selling, general and administrative expenses zubair ali raja: zubair ali raja: Compensation and benefit costs including • Stores • Headquarters Occupancy and operating costs of retail and headquarters facilities Advertising, offset by vendor income that is a reimbursement of specific, incremental and identifiable costs Pre-opening costs of stores and other facilities Other administrative costs	6,705	13,469	13,078	12,954	20.84%	19.99%	20.01%	19.95%	2.99%	0.96%	100.00%	$391	$124
Credit card expense zubair ali raja: zubair ali raja: The combination of bad debt expense and operations and marketing expenses within the Credit Card Segment.	174	860	1,521	1,609	0.54%	1.28%	2.33%	2.48%	-43.46% zubair ali raja: zubair ali raja: Decrease in credit card bad debt.	-5.47%	100.00%	($661)	($88)
Depreciation & amortization zubair ali raja: zubair ali raja: Straight line method is used to calculate depreciation.	1,022	2,084	2,023	1,826	3.18%	3.09%	3.10%	2.81%	3.02%	10.79%	100.00%	$61	$197
Total	7,901	16,413	16,622	16,389	24.56%	24.36%	25.43%	25.23%	-1.26% zubair ali raja: zubair ali raja: Operating expenses decreased by 1.26 that shows that internal functions have improved in FY2011	1.42%	100.00%	($209)	$233
Operating income	2,564	5,252	4,673	4,402	7.97%	7.79%	7.15%	6.78%	12.39% zubair ali raja: zubair ali raja: Operating income increase by 12.4% in FY2011 and by 6% in FY 2010.	6.16%	100.00%	$579	$271
Interest:
Nonrecourse debt collateralized by credit card receivables	37	83	97	167	0.11%	0.12%	0.15%	0.26%	-14.43%	-41.92%	100.00%	($14)	($70)
Other interest expense	338	677	707	727	1.05%	1.00%	1.08%	1.12%	-4.24%	-2.75%	100.00%	($30)	($20)
Interest income	(1)	(3)	(3)	(28)					0.00%	-89.29%	100.00%	$0	$25
Interest, net	374	757	801	866	1.16%	1.12%	1.23%	1.33%	-5.49% zubair ali raja: zubair ali raja: Interest expense decreased due to decrease in long term borrowing.	-7.51%	100.00%	($44)	($65)
Income from continuing operations before income taxes	2,190	4,495 zubair ali raja: zubair ali raja: Verifiable from Page 64 of 10K	3,872 zubair ali raja: zubair ali raja: Verifiable from Page 64 of 10K	3,536 zubair ali raja: zubair ali raja: Verifiable from Page 64 of 10K	6.81%	6.67%	5.92%	5.44%	16.09%	9.50%	100.00%	$623	$336
Provision for income taxes	797	1,575	1,384	1,322	2.48%	2.34%	2.12%	2.04%	13.80%	4.69%	100.00%	$191	$62
Net earnings	1,393	2,920	2,488	2,214	4.33%	4.33%	3.81%	3.41%	17.36% zubair ali raja: zubair ali raja: Net earning increased by 17.4% in FY2011	zubair ali raja: zubair ali raja: Total cost of products sold including • Freight expenses associated with moving merchandise from our vendors to our distribution centers and our retail stores, and among our distribution and retail facilities • Vendor income that is not reimbursement of specific, incremental and identifiable costs Inventory shrink Markdowns Outbound shipping and handling expenses associated with sales to our guests Payment term cash discounts Distribution center costs, including compensation and benefits costs	zubair ali raja: zubair ali raja: Compensation and benefit costs including • Stores • Headquarters Occupancy and operating costs of retail and headquarters facilities Advertising, offset by vendor income that is a reimbursement of specific, incremental and identifiable costs Pre-opening costs of stores and other facilities Other administrative costs	zubair ali raja: zubair ali raja: The combination of bad debt expense and operations and marketing expenses within the Credit Card Segment.			zubair ali raja: zubair ali raja: Sales increased by 3.7% due to remodeling of 341 target stores in FY2011 and opening of almost 70 stores in FY2010.	zubair ali raja: zubair ali raja: Straight line method is used to calculate depreciation.	zubair ali raja: zubair ali raja: Abandon the issuance of REDVisa Crad of Target.	zubair ali raja: zubair ali raja: Due to increase in net sales by 3.71%	zubair ali raja: zubair ali raja: Decrease in credit card bad debt.	zubair ali raja: zubair ali raja: Operating expenses decreased by 1.26 that shows that internal functions have improved in FY2011	zubair ali raja: zubair ali raja: Operating income increase by 12.4% in FY2011 and by 6% in FY 2010.	zubair ali raja: zubair ali raja: Verifiable from Page 64 of 10K	zubair ali raja: zubair ali raja: Verifiable from Page 64 of 10K	zubair ali raja: zubair ali raja: Verifiable from Page 64 of 10K	zubair ali raja: zubair ali raja: Interest expense decreased due to decrease in long term borrowing.	12.38%	100.00%	$432	$274
Basic earnings per share (in dollars per share)	$2.03	$4.03	$3.31	$2.87
Diluted earnings per share (in dollars per share)	$2.02	$4.00	$3.30	$2.86
Weighted-average number of common shares:
Basic	687	724	752	770
Diluted	691	729	755	774
Description and main changes identified of Target from BackEnd Analysis:-
Net sales of Target has increased by 3.7% in FY2011 mainly due to 2.1% store increase. Revenue for credit card has been decreased by 16.55 % in FY2011 but this component is only 2.5% of the total revenue. Sales in FY2010 just increased by 1% but suprisingly
cost of good sold wat not increased at all which shows that how beautifully they have managed the products and suppliers outside the organization. The recent increase in sales is owing to the remodling of 341 stores along with addition of new 13 stores.
Due to increase in sales in FY2011 the CGS also ncreased with same rate of 3.7%. Gross margin is decreased in FY2011 to 1.74% which was increased in FY2010 by 2.42%. This is maily due to increase in CGS in FY 2011. Target has succesfully able to increase its
selling and administration expenses at slower rate i.e. 2.9% and increase its operating income at higher rate i.e. 12.39% in comparison to the increase of net sales by 3.7% in FY2011. This is a very good signe showing that business functions are administered
cost effectively in Target. The credit card operation bad debts are decreased significantly by 43% in FY2011. This item also include the marketing expense in credit card operation. Target has stopped the issuance of it REDvisa card owing to which the marketing
expense is also decreased in FY2011. Amortization and depreciation rate remain the same in FY 2011 at 3.1% In FY2011 the aggregate of operating expenses decreased by -1.26% and increased by only 1.4% in FY 2010. This shows the Targets strategy of improving
the internal business operations. By improving their internal operations Target has decreased the operating expense, hence increased it operating income in FY2010 and FY2011. Target's operating income increased by 6.1% and by 12.4% in FY2010 and FY2011
respectively. Under vertical analysis the operating income in around 7% of the total revenue. This shows that Target saves 7cents for each dollar sold as an operating income. The interest expense is around 1.1% of the total revenue in FY2011. This interest expense
is decreasing mainly due to decreasing long term debt in FY2010 as Target did not go in to vast expansion in 2010. The most important point to note is the increase in earning in FY2011 by 17.36 and in FY2010 the net earning increased by 12.38%.
Conclusion and Main changes:
1) Net sales increased by 3.71% in FY2011 but increased only by 0.88% in FY2010. This is mainly due to remodeling of 341 stores in FY2011 and opening of almost 70 stores in FY2010.
2) Credit card revenue decreased by 16.55% in FY2011 mainly due to abandoning the issuance of Target's REDVisa card as Target is planning to issue new card with aided features.
3) Credit card expense decreased by 43% duw to less bad debts book under credit card segment in FY2011.
4) Operating expense in FY2010 was increased by 1.42% with increase in net sales by 0.88% only which shows poor performance of internal business functions in FY2010. However in FY2011 it was decreased by 1.42% in comparison to the increase in sale by 3.7%
5) Interest expense is only 1.2% of the total revenues. This expense is decreasing due to decreased amount of long term borrowing.
6) Finally in Income statement the key changes is noticed in net earning of Target. This is increased in FY2011 by 17.36% and in FY2010 by 12.38%
In my personal view this income statement of Target is clearly reflecting the strategy of the Target. The changes which I have identfied is showing clearly that the Target's strategy of remodeling of their stores and improving internal
business functions are affecting the income statements of the company.

Week6-TGT-BS BackEnd Analysis

TARGET Consolidated Statements of Financial Position (USD $)	Jul. 30, 2011	Apr. 30, 2011	Jan. 29, 2011	Jan. 30, 2010	Jan. 31, 2009	Vertical analysis			Horizontal Analysis			Absolut Analysis
In Millions, except Share data						29-Jan-11	30-Jan-10	31-Jan-09	29-Jan-11	30-Jan-10	31-Jan-09	29-Jan-11	30-Jan-10
Assets
Current Assets
Cash and cash equivalents, including marketable securities of $1,617 and $302	890	1,424	1,712	2,200	864	3.92%	4.94%	1.96%	-22%	155%	100%	(488)	1,336
Credit card receivables, net of allowance of $1,016 and $1,010	5,722	5,721	6,153	6,966	8,084	14.08%	15.64%	18.33%	-12%	-14%	100%	(813)	(1,118)
Inventory	7,926	7,696	7,596	7,179	6,705	17.38%	16.12%	15.20%	6%	7%	100%	417	474
Other current assets	1,521	1,527	1,752	2,079	1,835	4.01%	4.67%	4.16%	-16%	13%	100%	(327)	244
Total current assets	16,059	16,368	17,213	18,424	17,488	39.38%	41.37%	39.65%	-7%	5%	100%	(1,211)	936
Long Term Assets
Property and equipment
Land	5,999	5,989	5,928	5,793	5,767	13.56%	13.01%	13.08%	2%	0%	100%	135	26
Buildings and improvements	26,092	23,197	23,081	22,152	20,430	52.81%	49.74%	46.32%	4%	8%	100%	929	1,722
Fixtures and equipment	4,906	4,691	4,939	4,743	4,270	11.30%	10.65%	9.68%	4%	11%	100%	196	473
Computer hardware and software	2,392	2,270	2,533	2,575	2,586	5.80%	5.78%	5.86%	-2%	-0%	100%	(42)	(11)
Construction-in-progress	571	837	567	502	1,763	1.30%	1.13%	4.00%	13%	-72%	100%	65	(1,261)
Accumulated depreciation	(11,587)	(11,336)	(11,555)	(10,485)	(9,060)				10%	16%	100%	(1,070)	(1,425)
Property and equipment, net	28,373	25,648	25,493	25,280	25,756	58.33%	56.77%	58.40%	1%	-2%	100%	213	(476)
Other noncurrent assets	1,067	980	999	829	862	2.29%	1.86%	1.95%	21%	-4%	100%	170	(33)
Total long term assets	29,440	26,628	26,492	26,109	26,618	60.62%	58.63%	60.35%	1%	-2%	100%	383	(509)
Total assets (Current and noncurrent)	45,499	42,996	43,705	44,533	44,106	100.00%	100.00%	100.00%	-2%	1%	100%	(828)	427
Liabilities and shareholders' investment
Current Liabilities
Accounts payable	6,519	6,296	6,625	6,511	6,337	15.16%	14.62%	14.37%	2%	3%	100%	114	174
Accrued and other current liabilities zubair ali raja: zubair ali raja: Wages and benefits Taxes payable (a) Gift card liability (b) Straight-line rent accrual (c) Dividends payable Workers' compensation and general liability Income tax payable Interest payable Other (Not categorized else wheer)	3,721	3,229	3,326	3,120	2,913	7.61%	7.01%	6.60%	7%	7%	100%	206	207
Unsecured debt and other borrowings	1,130	1,124	119	796	1,262	0.27%	1.79%	2.86%	-85%	-37%	100%	(677)	(466)
Nonrecourse debt collateralized by credit card receivables	250	189	0	900		0.00%	2.02%	0.00%				(900)	900
Total current liabilities	11,620	10,838	10,070	11,327	10,512	23.04%	25.44%	23.83%	-11%	8%	100%	(1,257)	815
Long Term Liabilities
Unsecured debt and other borrowings	12,661	10,640	11,653	10,643	12,000	26.66%	23.90%	27.21%	9%	-11%	100%	1,010	(1,357)
Nonrecourse debt collateralized by credit card receivables zubair ali raja: zubair ali raja: Have to ask to the sir. Refernce Page 47 on SEC 10K	3,499	3,776	3,954	4,475	5,490	9.05%	10.05%	12.45%	-12%	-18%	100%	(521)	(1,015)
Deferred income taxes	969	916	934	835	455	2.14%	1.88%	1.03%	12%	84%	100%	99	380
Other noncurrent liabilities	1,644	1,596	1,607	1,906	1,937	3.68%	4.28%	4.39%	-16%	-2%	100%	(299)	(31)
Total noncurrent liabilities	18,773	16,928	18,148	17,859	19,882	41.52%	40.10%	45.08%	2%	-10%	100%	289	(2,023)
Total liabilities	30,393	27,766	28,218	29,186	30,394	64.56%	65.54%	68.91%	-3%	-4%	100%	(968)	(1,208)
Shareholders' investment
Common stock	56	57	59	62	63	0.13%	0.14%	0.14%	-5%	-2%	100%	(3)	(1)
Additional paid-in capital	3,385	3,345	3,311	2,919	2,762	7.58%	6.55%	6.26%	13%	6%	100%	392	157
Retained earnings	12,213	12,398	12,698	12,947	11,443	29.05%	29.07%	25.94%	-2%	13%	100%	(249)	1,504
Accumulated other comprehensive loss	(548)	(570)	(581)	(581)	(556)	-1.33%	-1.30%	-1.26%	0%	4%	100%	0	(25)
Total shareholders' investment	15,106	15,230	15,487	15,347	13,712	35.44%	34.46%	31.09%	1%	12%	100%	140	1,635
Total liabilities and shareholders' investment	45,499	42,996	43,705	44,533	44,106	100.00%	100.00%	100.00%	-2%	1%	100%	(828)	427
Common Stock, authorized shares (in shares)	675	689	6,000,000,000	6,000,000,000	6,000,000,000
Common stock, par value (in dollars per share)			0	0	0
Common Stock, shares issued (in shares)			704,038,218	744,644,454	752,712,464
Common Stock, shares outstanding (in shares)			704,038,218	744,644,454	752,712,464
Preferred stock, authorized shares (in shares)			5,000,000	5,000,000	5,000,000
Preferred stock, par value (in dollars per share)			0	0	0
Preferred stock, shares issued (in shares)			0	0	0
Preferred stock, shares outstanding (in shares)			0	0	0
Description:-
Balance sheet of Target is not reflecting the good condition in FY2010. However Target has improved substantially in FY2011. The cash was increased by 155% along with invetory which increased by 7% in FY2010. This shows that cash remained idle
and did not managed effectively by the management in FY2010. Although account recievables were reduced by 14% in FY2010 but this excess cahs should have been reinvested in the Target's operations for improved effeciency. Cash constitutes about
3 to 5% of the total assets. It was at the peak in FY2010 and reached at 4.94%. Recievable are at the higher side showing strategy of the target in doing more sales. Recievable are the significant portion of the total assets and constitutes about 14%
of the total asstes in FY2011. Though the sale of the Target increased by 3.7% but surprisingly account recievable went down in FY2011 by 12%. This shows that company has improved its collection policy and now managings its customers more effectively.
Due to the nature of the business the inventory of Target is also at higher side and contitutes about 17.5% of the total assets of the firm in at the end of FY2011. Invenory increase by 6% in FY2011 as there was the sales increase by 3.7% in the same year. But
at the end of FY2010 its closed by increasing 7% however the sales only increased by 0.88% which shows that there might be unnecessary pileup of inventory at the end of FY2010. The major portion of the total assest is not surprisingly Plant, property &
equipment(PPE) which is like Walmart is about 58% of the total assets of the Target. It decreased by 2 % in 2010 and increased by 1% only in 2011 due to opening of mere 13 stores in FY2011. Major emphasis is on the remodling of the stores rather opening
new stores. But Target is planing to move in international business by opening stores in Canada by 2013.
On the liability and equity side (L&E) account payable is15%, accrued liabilities 7.6%, unsecured debt is 27%, nonrecourse debt is 9% and retained earning is29% of the total L&E at the end of FY2011. Surprisingly even with the increase in sales the account
payables increase only by 2% at the end of FY2011. Accrued liabilities increased by 7% both at the end of FY2011 and FY2010. This contitutes the Wages and benefits for the worket along with other liabilities that can not be categorised else where. Long term
borrowing increased by 9% at the end of FY2011 due to the expansion in Canada but the same was decreased at the end of FY2010 by 11%. Target maintain an accounts receivable financing program through which it sell credit card receivables to a bankruptcy
remote, wholly owned subsidiary, which in turn transfers the receivables to a Trust. The Trust, either directly or through related trusts, sells debt securities to third parties. The retained earning of the Target is around 29% of the total L&D at the end of FY2011.
Though its is decreased only by 2% in FY2011 and increased by 13% in FY2010.
Conclusion and main changes itentified:-
1) Cahs is 3.5% of the total assets. But at the end of FY2010 it was on higher side and reached at 4.94% which means that this idle cash was not managemt effectively.
2)Ac recievable are 14% of the total assets and decreased by12% at the end of FY 2011 though the net sales were increased by 3.7% in FY2011.
3) Inventory is 17.5%of the total assets and increased by 6% percent at the end of FY2011 and 7% at the end of FY2010. Though in 2011 the net sales increased by 3.7% and in 2010 it increased merelyby 8%.
4) PPE is 58.33% of the total assets. However it is increased just by 1% at the end of the FY2011. This is because Target is not in to expansion of its business.
5) Accounts paybale are 15.16% of the total L&E and increased by only 2% at the end of the FY2011. Its absolute change is also very smal which is $114 million increase at the end of FY2011.
6) Accrued liabilities are around 7% of the total L&E and also increased by 7% at the end of FY2011 and FY2010. This consists of the wages and benefits payble to the workers.
7) Long term borrowing is 26% of the total L&E. It is increased by 9% as Target has planned to expand its operations in Canada by the 2013.
8) Retained earning is 29% of the whole L&E and is the biggest component of L&E side. It increased by 13% at the end of FY2010 however the same has decreased by 2% at the end of FY2011.
In my personal view the change highlighted through commonsize analysis is bit confusing for Target. Though its sales increased but account recievable went down at the end of FY2011 i.e. by 12%. Its inventory also did not increase with same
pace i.e. by6% only. Account payble increased by mere 2% even the sales where increased by 3.7% in FY2011. Therefore I this that these variances and changes do not clearly tells the strategic intentions of the management of Target.

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Finance 9

Walmart Balance Sheets-Cal

Target Balance Sheets-Cal

Target-Income Statement

Walmart-Income Statement

Week 6- WM-IS BackEnd Analysis

Week6-WM-BS BackEnd Analysis

Notes

Week 6-TGT-IS BackEnd Analysis

Week6-TGT-BS BackEnd Analysis

Sheet2