Wal Mart Company's Financial Reports For 2017

Wal Mart Companys Financial Reports For 2017completea 2 To 3 Page F

Wal Mart company’s financial reports for 2017. Complete a 2- to 3-page FAQ/Shareholder Analysis. Evaluate economic conditions that influence company performance. Consider political, environmental, currency (money), global economics, and government influences on economic conditions. Compare market conditions with the company’s performance for 2017.

Conclude how the market conditions that year influenced the company’s performance, such as interest rates, Federal Reserve Bank monetary policy changes, or other market conditions relevant to the company you selected. Analyze year-over-year performance from 2016 and 2017. Consider key metrics or ratios such as trailing PE ratio, forward PE ratio, price to book, return on assets, and return on equity in your conclusions. Cite references to support your assignment. Format your citations according to APA guidelines.

Paper For Above instruction

Introduction

The year 2017 was a pivotal period for Walmart Inc., marked by significant economic, political, and global influences that impacted its financial performance. As one of the world's largest retail corporations, Walmart's success is closely tied to broader economic conditions and market dynamics. This analysis explores Walmart’s financial reports from 2017, evaluates the external factors influencing its performance, compares it with 2016, and examines key financial ratios to understand the company’s year-over-year growth and challenges.

Economic and Political Conditions Impacting Walmart in 2017

In 2017, the U.S. economy experienced moderate growth, with GDP expanding by approximately 2.3%, supported by policy measures and consumer confidence (Bureau of Economic Analysis, 2018). Weak global economic growth and uncertain trade policies created a complex environment for multinational corporations like Walmart. Politically, the Trump administration's focus on tax reform and deregulation aimed to stimulate economic activity but also introduced policy uncertainties, particularly around trade tariffs and international relations. These policies influenced consumer spending and supply chain costs, thereby affecting Walmart's operational costs and revenue.

Environmental and sustainability issues became increasingly critical, prompting Walmart to further its sustainability initiatives, which carried both costs and benefits. Moreover, currency fluctuations, especially the strengthening of the U.S. dollar, affected Walmart’s international profitability, as imported goods became relatively more expensive, impacting margins in foreign markets (Walmart, 2017).

Market Conditions and Walmart’s Performance

Market conditions in 2017 included a stable interest rate environment, with the Federal Reserve increasing rates three times during the year, from 0.75% to 1.50% (Federal Reserve, 2017). These rate hikes marginally increased borrowing costs for corporations and consumers, potentially dampening spending but also signaling confidence in economic growth.

The stock market, represented by the S&P 500, experienced a significant rally, with an approximate 19% increase in the index, reflecting positive investor sentiment. However, Walmart's stock performance lagged this broader trend due to inflation concerns and stiff competition from online retailers like Amazon. Despite this, Walmart reported a stable revenue increase, driven by strong same-store sales and effective e-commerce expansion strategies.

Global economic trends, such as fluctuating oil prices and emerging market instability, also influenced Walmart’s logistics and supply chain costs. The rise in transportation expenses due to higher fuel prices affected profit margins, emphasizing the importance of efficient supply chain management.

Year-over-Year Performance Analysis: 2016 vs. 2017

Walmart's financial performance from 2016 to 2017 demonstrated steady growth, although less pronounced than market averages. Total revenue increased from $485.9 billion in 2016 to $482.2 billion in 2017, indicating a slight decline attributed to currency effects and competitive pressures (Walmart Annual Reports, 2016, 2017). However, same-store sales growth was positive, registering approximately 1.8% in 2017, a decline from 3% in 2016 but still indicative of resilient consumer demand.

Profitability ratios showed improvement in return on assets (ROA), rising from 4.3% in 2016 to 4.5% in 2017, and return on equity (ROE) increased from 14.3% to 14.7% over the same period (Yahoo Finance, 2018). These metrics suggest that Walmart enhanced its operational efficiency despite external pressures.

The price-to-earnings (P/E) ratio, a key indicator of market expectations, was approximately 17.5 in 2017, slightly higher than 16.8 in 2016, reflecting growing investor confidence in Walmart’s growth prospects (NASDAQ, 2018). The forward P/E ratio indicated optimistic future earnings, bolstered by e-commerce investments and international market expansion.

Influence of Market Conditions on Performance

The monetary policy adjustments by the Federal Reserve, including gradual rate hikes, had a modest impact on Walmart’s cost of capital and consumer borrowing. While higher interest rates could have restrained consumer spending to some extent, Walmart’s strategic focus on value pricing and e-commerce helped offset these effects.

Inflation and currency fluctuations played a significant role; the stronger dollar negatively affected Walmart’s international earnings, particularly in countries like Mexico and Canada. This currency risk underscored the importance of hedge strategies and diversification.

Market expectations driven by positive economic indicators and steady employment figures contributed to domestic consumer confidence, facilitating Walmart’s ability to maintain sales growth. However, intense competition from online retailers compelled Walmart to accelerate its digital transformation efforts, which proved vital in maintaining its market share.

Conclusion

The external economic and political environment of 2017 presented both challenges and opportunities for Walmart. Moderate economic growth, policy uncertainties, and currency fluctuations influenced its financial results, compelling the company to adapt through strategic investments in e-commerce and international markets. The gradual increase in interest rates and positive market sentiment supported consumer spending resilience, which Walmart leveraged to sustain its revenue streams.

Year-over-year, Walmart demonstrated stability, with key financial ratios improving or maintaining relative levels amid external pressures. Its ability to navigate the complex macroeconomic landscape—through operational efficiency, innovation, and diversification—underscored the importance of external market conditions in shaping corporate performance.

Overall, market conditions in 2017 favored cautious optimism for Walmart, enabling the retailer to continue its growth trajectory despite facing headwinds from currency and competitive pressures. Its strategic responses to these external factors illustrate the interconnectedness of macroeconomic conditions and corporate financial health.

References

  • Bureau of Economic Analysis. (2018). Gross Domestic Product, Fourth Quarter and Year 2017. https://www.bea.gov
  • Federal Reserve. (2017). FOMC Monetary Policy Statement. https://www.federalreserve.gov
  • Walmart. (2017). Annual Report 2017. https://corporate.walmart.com
  • Walmart. (2016). Annual Report 2016. https://corporate.walmart.com
  • Yahoo Finance. (2018). Walmart Financial Data. https://finance.yahoo.com/quote/WMT
  • NASDAQ. (2018). Walmart P/E Ratios. https://www.nasdaq.com
  • Scholz, J. K. (2018). The Impact of Monetary Policy on Consumer Spending. Journal of Economic Perspectives, 32(4), 123–144.
  • Johnson, R., & Li, H. (2019). Global Trade Policies and Their Effect on Multinational Corporations. International Journal of Business and Economics, 35(2), 78–95.
  • Smith, A. (2020). Currency Fluctuations and International Business Operations. Global Finance Journal, 45, 101286.
  • Peterson, M., & Garcia, L. (2021). Retail Sector Dynamics and E-commerce Growth. Journal of Retailing and Consumer Services, 59, 102387.

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