Sung Woo Park International American University FIN 500: Fin

Sung Woo Park International American University FIN 500: Financial management Vahick Yedgarian, Ph.D., J.D., M.B.A., M.S. April 15th, 2021

According to the market analysis of Walmart, the retail firm is considered an unstoppable retail force. It is ranked as the first or number retail firm and the largest business organization in revenue and employee size. The company's total number of employees is estimated to be 2.2 million employees across its different stores. Apart from the retail business line, it also undertakes wholesale business activities (Tan, 2017).

It provides all types of assortment merchandise as well as services for affordable costs. In this research paper, the main objective is to undertake a cash flow analysis statement of Walmart and its Relevance to its investors (Tan, 2017). A cash flow statement is an important financial statement. A cash flow statement is understood as the financial statement that summarizes the financial or cash amounts. It is a summary of the amount in cash and cash equivalents (Murphy, 2021).

In other words, it reflects the amount of cash entering and leaving an organization. The cash flow statement provides measures of a company’s financial strength and reflects its position in terms of revenue (Murphy, 2021). Besides, it helps investors to make the right financial decision. The cash flow statement is an important financial document to investors. Investors always have a trait of looking at how a company is performing by evaluating the progress, the trends among other issues, and deciding whether to invest in the company.

Investment decision-making in an in-depth analysis is usually achieved by looking at the cash flow performance based on an analysis of different elements of the statement. The cash flow statement for Walmart is an important document to its investors. The cash flow statement of Walmart is an important measure of the profitability of the company. Besides, it provides investors with a clear picture and future projection outlook of how the company will be. Based on the analysis of the company’s cash flow statement company has been recording high levels of revenue over the past few years.

As a result, it has been ranked as the largest company in terms of revenue collected. Such a specific entity of the company is a clear reflection that Walmart is indeed a profitable firm in profitability (Tan, 2017). Hence, it is a clear reflection to the investors that the company is making money instead of losses. For instance, over the past few years, the company has recorded a revenue increment and stability. The economic analysis measures the company revenue growth in terms of net sales changes to be 7.2% (WMT | Walmart Inc. Annual Cash Flow Statement | Market Watch, 2021). Such a growth rate is indeed admirable and attractive to investors searching for companies to invest in. The company's revenue level is a general overview and clear or direct instant and reflection of how the company is performing. Moreover, investors of Walmart can use the company's cash flow statement by looking at the various elements of the company's breakdown.

One of the elements of the Walmart cash flow statement is the operating cash flow. The operating cash flow is a flow of cash inflows and outflows of the company in terms of all the operational activities. For Walmart, the operating income is indeed large. Hence, it is a clear reflection that the company undergoes substantial income flow (Ball, 2018). The operating activities are important to the investors since it shows them the amount of income the company is generating, their expenditure behavior on various aspects such as overhead, expenses among forms of operation costs (Tan, 2017).

The other element of the cash flow statement is the investment cash flow. The investment cash flow is an important element of the cash flow statement that plays a key role in enabling investors to make the right decision on whether or not to invest in a company. The platform or part of the cash flow statement shows the cash flow obtained from the company's investment activities (Tan, 2017). Based on the overview of the cash flow statement for Walmart, the company is indeed performing well and hence providing a good image to the investors. As an investor, it is worth investing in the company since its investment cash flow section reflects better performance in non-current assets and current assets (Ball, 2018).

Furthermore, there is also the financial cash flow section. Walmart's financial cash flow section is showing the cash between the company and its owners and its creditors. It provides investors with key financial data on borrowed money, debt repayment information, and the payment of financial dividends. It also presents the capital that has been invested into the company's operation within the required financial year. For the investors who are willing to be part of the business management stakeholders to assess whether their capital will be valuable.

The last section is usually the net cash flow section. The net cash flow section provides the net income after the company has deducted all its expenses. It is a clear reflection of the company’s profitability performance and enables investors to make the right decision based on the company's profitability performance (Ball, 2018). Summary and Conclusion In conclusion, Walmart is among the best-performing companies in the world. The company has been recording the highest revenues in the economy compared to other bigger corporations. However, investors always look at the cash flow statement and evaluate various entities and financial parameters to make the right decision. The cash flow statement of Walmart is indeed a true reflection of what the company is. From a realistic perspective, it is worth the value to invest in the company as an investor.

Paper For Above instruction

The financial management and investment decisions of major corporations like Walmart hinge significantly on comprehensive financial statements, particularly the cash flow statement. Walmart, as a leading global retailer, exemplifies the importance of cash flow analysis in assessing company performance and guiding investor decisions. This paper explores Walmart’s cash flow statement, its components, and its relevance to investors, providing a detailed understanding of how financial data interlinks with strategic investment choices.

Introduction: The Significance of Cash Flow Statements

The cash flow statement is a pivotal financial document that offers insights into a company’s liquidity and financial health. Unlike the income statement, which records revenues and expenses, the cash flow statement emphasizes actual cash movement, providing a clearer picture of a company's operational efficiency, investment activities, and financing strategies (Murphy, 2021). For investors, understanding cash inflows and outflows is essential because it directly influences the firm’s ability to sustain operations, service debts, and return value to shareholders.

Walmart’s Cash Flow Overview and Its Strategic Importance

Walmart’s cash flow statement reveals the enterprise’s robust operational cash flows, consistent investment in growth, and strategic financial management. Over recent years, Walmart has reported high levels of operating cash flow, underscoring its effective management of core retail functions (Ball, 2018). Its ability to generate substantial cash from operations enables ongoing investments, debt repayment, dividends payments, and capital expenditures, which collectively sustain its competitive stance.

Operating Cash Flows and Their Implication for Investors

Operational cash flows are critical indicators of a company's core business performance. Walmart’s high operating cash flows demonstrate strong revenue streams and operational efficiency. As Tan (2017) notes, positive operating cash flow suggests that the firm’s everyday business operations are generating sufficient cash, reinforcing its profitability and capacity for reinvestment. For investors, a consistent increase in operating cash flow indicates stability and growth potential, which are attractive attributes for long-term investment.

Investment Cash Flows and Future Growth Alignment

Investment cash flows reflect how a company allocates capital toward growth opportunities or asset acquisitions. Walmart’s investment activities, such as acquiring property, equipment, or expanding distribution networks, influence future revenue prospects. According to the firm’s cash flow statements analyzed by Ball (2018), Walmart demonstrates healthy investment cash flows, reinforcing its commitment to expansion and innovation. This aspect signals to investors that Walmart actively invests in maintaining and expanding its competitive advantage, thus aligning with long-term strategic growth.

Financial Cash Flows and Capital Structure Management

Financial cash flows encompass transactions related to debt, equity, and dividends. Walmart’s ability to manage its financial cash flows effectively is reflected in its capacity to service debt, pay dividends, and raise capital when needed (Murphy, 2021). These flows are vital for investors to assess the firm’s financial stability and leverage management. A balanced financial cash flow pattern indicates prudent financial management, reducing risk and offering potential for steady returns.

Net Cash Flows and Overall Profitability

The net cash flow summarizes the overall cash position after accounting for operating, investing, and financing activities. Walmart’s positive net cash flows underscore its profitability and liquidity resilience. For investors, consistent positive net cash flow indicates that the company is generating sufficient liquidity to support dividends and reinvestment, reducing investment risks (Tan, 2017). As Walmart continues to demonstrate stable cash flows, confidence among investors is reinforced.

Conclusion: The Investment Outlook Based on Walmart’s Cash Flow

Analyzing Walmart’s cash flow statement reveals a resilient and well-managed company capable of sustaining growth and rewarding investors. Its strong operating cash flows, prudent investment activities, and effective financial management underpin its leadership position. For investors, Walmart’s cash flow indicators signal stability, profitability, and future growth potential, making it an attractive investment opportunity. As demonstrated through detailed financial analysis, the cash flow statement is an indispensable tool in evaluating the true financial health of a large corporation like Walmart, guiding informed investment decisions.

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