AB 209 unit 5 Comparison of Financial Statements 1

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Comparison of Financial Statements

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Comparison of Financial Statements of Wal-Mart® and Target®

In this paper, I will be comparing the income statements and balance sheets for the two American retailing companies, for the first quarter of 2015.

The income statements of both retailers are unaudited as they appear in their website, meaning that the accuracy and integrity of the figures is unverified. The statements of income of both companies indicate that there is a reduction of sales for this year’s 1st quarter, from last year’s. Wal-Mart’s 1st quarter ending April 30 was a reduction of 0.1%, from last year’s sales, with the figures standing at $ 114,167 million (as at April, 30 2014), and $ 114,002 million as at April, 30 2015). Target’s figures stood at $ 16,657 million in last year’s first quarter, and $ 17,119 million as at this year’s 1st quarter. The cost of goods sold were categorized differently by both companies’ statements, where Target placed their cost of goods under segmented results, while Wal-Mart placed theirs under the statements of income. Wal-Mart managed to reduce their cost of sales by 0.3%, which is represented by $ 86,483 million down from $ 86,714 million. On the other hand, Target failed to reduce their cost of sales, and it increased from $ 11,748 million to $ 11,911 million, representing a 1.4% increase, from last year’s first quarter. However, Target’s Net earnings from continuing operations increased sharply, by 14.0%, a factor that highly contributed to the Net earnings increase by 51.6%. This is attributed to the high cost of sales and the reduced operational costs. Income from continuing operations attributable to Wal-Mart on the other hand reduced significantly by 6.7 % from $ 3,582 million to $ 3,341 million. This, among other reason, is attributed to an increase in the operational cost.

The balance sheets of the two companies have some differences in that Wal-Mart has included equity in their balance sheet so as to come up with a total sum of equity and liabilities, while Target’s balance sheet only includes the liabilities and assets to cum up with the financial position of the company. The two companies’ balance sheets are similar in that they contain figures of three periods, which are end of last years’ 1st quarter, beginning of this year’s 1st quarter, and end of this year’s 1st quarter. The total liabilities in all the periods and the total liabilities (and equity) for the same are equal in both the companies, which shows a balanced calculation. For Target, the total assets and liabilities has been decreasing from the end of 2014 1st quarter to the beginning of 2015 1st quarter, and still reducing, where it stands at $ 40,446 million from $ 41,404 million. The trend is different for Wal-Mart, where it saw an increase $ 202,517 million to $ 203,490 million in the beginning of the 1st quarter, but reduced to $ 200,747 million.

One of the things that would be beneficial for investors to note would the fact that Target returned $895 million to shareholders in the 1st quarter 2015, which represents more than 140% of the net income. The company for the first time since the 2nd quarter of 2013 returned cash through share repurchase, with purchases in the 1st quarter of $562 million in shares of common stock. In their financial statement, Wal-Mart advices their investors and shareholders to consider all the risks, uncertainties and other factors identified therein. Wal-Mart does not assure anyone that the future results that are projected or implied by such a forward-looking statement as in the financial report will be realized fully, or even substantially. Wal-Mart acknowledges that there are uncertainties that might affect Wal-Mart’s operations or financial performance. Such forward-looking statements are made as of the date of this release, and Wal-Mart undertakes no obligation to update such statements to reflect subsequent events or circumstances.

References

Target Reports First Quarter 2015 Earnings. (2015, May 20). Retrieved June 13, 2015, from

http://investors.target.com/phoenix.zhtml?c=65828&p=irol-newsArticle&ID=2051624

Walmart reports Q1 FY 15 EPS of $1.03. (n.d.). Retrieved June 13, 2015, from

http://stock.walmart.com/files/doc_financials/2016/Q1/Press-Release_v001_n916bo.pdf




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