Walmart Research

Wal-Mart 2003’s liquidity is a concern to our analysis. Its quick and current ratios reflected high current liabilities. However, by looking at Wal-Mart’s cash flows, which increased substantially during the same year from $10.3 billion to $12.5 billion (WMT-annual report), we feel that Wal-Mart will meet its current financial obligations without a problem. As reported, the company paid $1.3 billion of debt in the year of 2003. In addition, Wal-Mart’s capital asset reinvestment and stock repurchase plan were high and they implied management’s control to maintain sustainable growth in the short term. Regarding the soundness of the consolidated balance sheet, one thing would raise a concern is the $1000 million of debts which can collected at any time depending on the creditors’ discretions. Without knowing for sure when these creditors may choose to collect the debts, the company needs to have a certain strategy to deal with such possibly material amount of cash.

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This under-fund status should be dealt promptly.

One going concern is the under-funded status of the Company’s United Kingdom subsidiary, ASDA. The Company made annual contributions in cash to these plans on behalf of all eligible Associates, including those who did not elect to contribute.

Leases Analysis:

The Company utilizes both operating and capital leases in its operations. Overall, the outlook for the company’s long-term debt is positive.

International employees also share the benefits of retirement savings and profit sharing plans. 40)

It is usually for the industry to have a long lease term. As mentioned in the contractual obligations section, both capital and non-cancelable leases account for more than $13,000 million or %37out of the $35,494 total contractual cash obligations.

Capital leases would increases the tightness of debt covenants and therefore possibly hinder the company from obtaining additional debts. The benefit obligation is estimated at $807 million while its fair value of plan assets is worth only $601 million. Meanwhile, interest cost declined by . The average cost of each of these leases is $12 million annually over the lease term.

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