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Module 10 – Detailed Analysis Junichi Hara

Module 10 – Detailed Analysis Junichi Hara. Agenda. Balance sheet Income statement Unresolved issues. 1. Balance Sheet. PPE. PPE. Trend: Land. Trend: Buildings. Trend: Fixtures. Trend: Transportation. Trend : CIP. Deferred Tax Asset/Liabilities.

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Module 10 – Detailed Analysis Junichi Hara

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  1. Module 10 – Detailed AnalysisJunichi Hara

  2. Agenda • Balance sheet • Income statement • Unresolved issues

  3. 1. Balance Sheet

  4. PPE

  5. PPE

  6. Trend: Land

  7. Trend: Buildings

  8. Trend: Fixtures

  9. Trend: Transportation

  10. Trend: CIP

  11. Deferred Tax Asset/Liabilities • Deferred tax assets and liabilities scattered

  12. Deferred Tax Asset/Liabilities Step 1: • Subtract out amounts from accounts

  13. Deferred Tax Asset/Liabilities • Step 2: Create new accounts

  14. Deferred Tax Asset/Liabilities • All assets and liabilities seem to be enterprise • Valuation allowance? • “More likely than not that the deferred tax asset will not be realized.” • “Management believes that it is more likely than not that the remaining net deferred tax assets will be fully realized.” • Implication for projection?

  15. Goodwill

  16. Goodwill • Sam’s Club Goodwill flat • Goodwill increasing consistently except 2014 • Walmart international makes up majority • Loss of $1B in 2014 for “Changes in currency translation and other”??? • Projection implications?

  17. Other items • Accrued liabilities – Split out into four accts. • Accrued wages and benefits • Self-insurance • Deferred membership fee revenue • Other • Walmart has defined contribution plan (401k) • UK and Japanese subs have defined benefit • Split out underfunded portion from “deferred income taxes and others” (gross amounts not provided) • UK: $69 million, Japan: $281 million as of 2014

  18. 2. Income Statement

  19. How to segment net sales? Product line? Geography/Business line?

  20. Product line • Grocery grew 3% over 5 years • Overall not much change • Doesn’t really help predict total net sales

  21. Product line • Walmart international out growing U.S. • Makes sense, U.S. is saturated • Geography/product line seems more promising for projection

  22. How to segment net sales? Product group? Geography/Business line?

  23. Net sales by geography

  24. Growth • Walmart Int. rapidly growing in 2011-2013 • What happened in 2014? • Have all three segments peaked? • Need to dig deeper

  25. Membership fee revenue • Membership fee slowly rising • Need to do dig into what the rest of other income is

  26. SG&A • Advertising and restricted stock appear flat • Stock options decreasing? • Pre-Opening costs tied to no. store openings?

  27. 3. Unresolved issues

  28. Additional segment info. • Is it possible to calculate NEA and EPM for each segment?

  29. Derivatives? • In addition to currency swaps, we have designated foreign-currency-denominated long-term debtas nonderivative hedges of net investments of certain of our foreign operations. At January 31, 2014 and 2013, we had £2.5 billion of outstanding long-term debt designated as a hedge of our net investment in the United Kingdom.

  30. Derivatives? • Are hedges enterprise or financing? • Should I separate out from debt? • Fair value/derivative accounting implications?

  31. Receivables • Portion of receivables from consumer credit products sold by Walmart International • Footnotes give data only up to 2011 • Just guess/estimate? • How will it help projection?

  32. Wishlist • More data on geographical segments • E.g. CoGS • Ideally have EATO and EPM for each segment • Project each segment individually

  33. Expanded Balance Sheet

  34. Expanded Balance Sheet

  35. Expanded Balance Sheet

  36. Expanded Income Statement

  37. Next steps • Need to check for changes in enterprise and financing item classifications • Need to identify forecasting implications/opportunities • Need to read re-read footnotes to understand meaning behind numbers

  38. Questions?

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