Income Statement Walmart Amazon Dollars Million Percentage O
Income Statementswalmartamazondollars Millionpercentage Of Salesdol
Income statements Walmart Amazon Dollars ($million) Percentage of sales Dollars ($million) Percentage of sales Revenue 485,000 100% 177,866 100% Gross profit 124,665 25.7% 40,871 23.0% Operating income 22,764 4.7% 4,106 2.3% Interest expense 2,490 0.5% 848 0.5% Net income 13,643 2.8% 3,033 1.7% Earnings per share 4.32 3.2X Price/Earnings ratio 3.2X 6.1X Balance sheets Walmart Amazon Dollars ($million) Percentage Dollars ($million) Percentage Current assets 57,689 29.9% 60,840 43.0% Current liabilities 66,666 34.6% 57,084 32.1% Total assets 198,000 100% 131,256 100% Total liabilities 121,087 61.1% 103,601 78.8% Shareholder's equity 77,798 39.2% 27,709 21.2% Network Capital (current assets-current liabilities) -8,977 N.A. 3,756 N.A. Cash flow from operations 31,434 N.A. Cash flow from investment (13,819) N.A. Cash flow from financing (18,860) N.A. Net change in cash (Beginning cash 6,981 ending cash 6,456) N.A. Liquidity Ratios walmart amazondays in receivables [accounts receivable/ (annual credit sales/365)] 5,835 / (485,873 / 365) ≈ 4.39 days 13,164 / (177,866 / 365) ≈ 27.09 days Days in inventory [inventory / (annual cost of goods sold / 365)] 43,046 / (361,256 / 365) ≈ 43.52 days 16,047 / (137,183 / 365) ≈ 42.65 days Operating Ratios walmart amazond Operating return on assets (Operating profits/total assets) 22,764 / 198,000 ≈ 11.5% 4,106 / 131,256 ≈ 3.1% Operating profit margin (operating profits / sales) 22,764 / 485,000 ≈ 4.7% 4,106 / 177,866 ≈ 2.3% Total asset turnover (sales / total assets) 485,000 / 198,000 ≈ 2.45X 177,866 / 131,256 ≈ 1.36X Fixed asset turnover (sales / net fixed assets) Data insufficient for Amazon Fixed asset turnover, but likely lower than Walmart’s given asset composition Financing ratios walmart amazond Debt ratios (total debt / total assets) 121,087 / 198,000 ≈ 61.1% 103,601 / 131,256 ≈ 78.8% Times interest earned (operating profits / interest expense) 22,764 / 2,490 ≈ 9.14X 4,106 / 848 ≈ 4.84X Return on Capital walmart amazond Return on equity (net income / shareholder's equity) 13,643 / 77,798 ≈ 17.5% 3,033 / 27,709 ≈ 10.9% Shareholder Value Ratios walmart amazond Price / Earnings ratio 3.2X 6.1X Price / Book ratio 25.7X 50.9X
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Both Walmart and Amazon are giants in the retail industry, but their financial statements reveal significant differences that highlight their unique operational models, financial health, and strategic challenges. Analyzing their income statements, balance sheets, liquidity, operating efficiency, financing strategies, and shareholder value metrics provides insights into the key issues each company faces and informs investment recommendations.
Key Issues Facing Walmart
Walmart's financial data indicates a mature business with stable revenue, solid liquidity ratios, and efficient asset utilization. However, key issues include its relatively low operating profit margin of approximately 4.7%, which suggests limited profitability from core operations. The company's high debt ratio (around 61%) highlights reliance on leverage, which could pose risks if interest rates rise or if sales decline. The inventory turnover and days in receivables are quite effective, with inventory days around 43.5 and receivables approximately 4.4 days, reflecting efficient working capital management. Nonetheless, Walmart faces increasing competition in the domestic market from Amazon and other e-commerce players, which pressures margins and customer loyalty.
Key Issues Facing Amazon
Amazon's financials show rapid growth with higher revenue growth rates but significantly lower profitability, with operating margin at about 2.3% and return on assets of approximately 3.1%. The company's high price/book ratio (50.9X) indicates strong investor confidence but may also reflect overvaluation or market expectations of future growth. Amazon's high debt levels (around 78.8%) pose financial risks, especially as it continues to invest heavily in infrastructure and technology. The longer receivables period (~27 days) and comparable days in inventory (~42.7 days) highlight operational efficiency but also reveal challenges in supply chain management. Amazon's dominant position in ecommerce and cloud computing (via AWS) cannot be ignored, but rising competition and thin margins pose risks to sustained profitability.
Comparative Analysis and Strategic Concerns
Walmart's stable and mature operational profile contrasts with Amazon’s aggressive growth and innovation-focused approach. Walmart's lower debt ratio and higher return on equity (17.5%) indicate a stable financial footing, enabling it to maintain competitive prices and invest in omnichannel retail strategies. Amazon's higher growth potential is offset by concerns over profitability and leverage; its lower return on equity (~10.9%) suggests that shareholders may face limited returns unless profitability improves.
Conclusion and Investment Recommendations
Considering the financial data, Walmart appears to be the more stable and financially secure investment choice, offering moderate growth with less financial risk. Its strong liquidity position, efficient asset utilization, and stable profitability metrics make it resilient against market volatility. Conversely, Amazon’s high growth potential is tempered by thinner margins, higher leverage, and operational risks. For risk-averse investors prioritizing stability and consistent returns, Walmart is preferable. However, investors seeking higher growth and willing to accept higher risk could consider Amazon, provided they are comfortable with its valuation and profitability challenges. Overall, based on the current financial analysis, Walmart stands out as a better investment opportunity due to its lower risk profile and stable financial position.
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