Financial Analysis of Walmart and Target
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Financial Analysis of Walmart and Target
Running head: WAL-MART COMPANY FINANCIAL ANALYIS 1
WAL-MART COMPANY FINANCIAL ANALYIS
Financial Analysis of Walmart and Target
Unit 1
Richard Hairston
GM506 Strategic Financial Analysis
Dr. Richard Carter
Financial Analysis of Walmart and Target
9/4/17
Wal-Mart has been and is still the world’s largest retailer company that was founded by Sam Walton when he decided to lower his profits, reduce sale prices thus achieve higher sales volume than his competitors as his main objective was to help people save money to be able to live better lives. Wal-Mart has almost 3000 stores in at least 14 countries hence has the largest revenue in the world.
Particularly, I chose Wal-Mart company since it is the retailer with the largest market share in the world thus enjoys economies of scale as it is able to share its fixed cost over many products hence the
cheapest retailer for customers. The company is able to efficiently and effectively use its available resources like information system, distribution facilities, knowledge and skills over various locations.
It always strive to improve on its performances and implement strategies on managing stores, hiring of new employees hence huge gains.in terms of risk management, the company experience
minimal risk since it experiment with less risks in various stores (Hausman & Leibtag, 2007).
The size of Wal-Mart makes it to exercise market power over its competitors like Target and its suppliers. It also sells selected items at cheaper prices than its competitors this driving out competitors
to gain market power. Target on the other hand is the one of the biggest competitor of Wal-Mart thus it is important to bench mark the company with its major competitor so as to ensure that the
company maintain its market position and to react to their competitors effectively without risking being out of business.
The main difference between Wal-Mart and Target is in terms of the market size. Wal-Mart has a larger market share than Target hence can get huge discounts from their suppliers and is therefore able to pass the savings to the customers through sale of cheaper products than at Target (Hausman & Leibtag, 2007).
For investment purposes, it is very important to first assess the company’s competitors, suppliers, and customers to be able to understand how the company works to determine if it is profitable or not.
By looking at financial statement of the company, one is able to conclude how long the company has existed, if it has been growing. This is to mean that profits and revenues have been growing for the
last three or five years (Koller & Wessels, 2010).
For this analysis, looking at both Wal-Mart and Target’s company income statement for the year 2017,it is clear that the total revenue for Wal-Mart is greater( $485,873,000) than that of Target (
$69,495,000). The net income for Wal-Mart is also greater (S13, 643,000) than that of Target ($2,737,000). From these descriptions, it I would prefer to invest in Wal-Mart since its revenues has been
growing and it has a promising future for investors (Koller & Wessels, 2010).
Reference
Hausman, J., & Leibtag, E. (2007). Consumer benefits from increased competition in shopping outlets: Measuring the effect of Wal‐Mart. Journal of Applied Econometrics, 22(7), 1157-1177.
Koller, T., Goedhart, M., & Wessels, D. (2010). Valuation: measuring and managing the value of companies (Vol. 499). john Wiley and sons.
RUBRIC
Excellent Quality
95-100%
Introduction 45-41 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Literature Support
91-84 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Methodology
58-53 points
Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score
50-85%
40-38 points
More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.
83-76 points
Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
52-49 points
Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality
0-45%
37-1 points
The background and/or significance are missing. No search history information is provided.
75-1 points
Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.
48-1 points
There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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