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Instructions:
Financial statement analysis essay assignment
Course Project
Alicia Younes
South University-Online
Financial statement analysis
FIN4060
07/26/2021
Introduction
Alibaba and Walmart are well-established e-commerce retail companies that operate globally. Alibaba is well known for the high consistency and value of its products while Walmart for high sales. These two companies have stable financial status because of their high global reputation. The paper analyzes the income and balance sheet statements of Walmart and Alibaba.
Income Statement items
One important income statement item for investors is the sales or revenue. This represents the income generated from an organization’s operations before deducting the expenses. Revenue would be important for an investor as it helps assess the growth of a company. (Hasanaj & Kuqi, 2019). Walmart has high revenue and reports increasing and stable revenue. In FY 2021, it reported revenue of $559,551M a 6.72% increase from 2020 ($523,964M). Alibaba reported sales of $109, 480M in FY 2021, a 52.09% rise from 2020 ($71.985B). Both Walmart and Alibaba have been reporting increasing revenue; however, Alibaba has high revenue increase than Walmart. Besides, Walmart reports high revenue compared to Alibaba.
The second important item is the net income. It indicates the amount of profit a company made after paying off all its expenses. It is the amount available to pay dividends, reinvest and repurchase shares. Walmart reported a net income of $13.51B in FY 2020, a 9.21% decrease from 2020 ($14.881B). Alibaba reported Net Income of $22.941B, an 8.83% increase from 2020 ($21.08B). Alibaba reports a high net income compared to Walmart. Besides, Alibaba has stable and increasing Net income, unlike Walmart.
The third item is operating income which would be important for investors as it is an indirect measure of efficiency (Hasanaj & Kuqi, 2019). Walmart reported an operating income of $22.548B, a rise of 9.63% from $20.568B (2020). Alibaba, on the other hand, reported a 13.688B, an increase of 5.35% from $12.993B. Walmart reports high operating income than Alibaba. Besides, Walmarts operating income is more stable and predictable compared to Alibaba.
Balance Sheet items
The first balance sheet item is current assets. They are important because they help finance the operational expenses of a company, therefore, an indicator of liquidity (Dauderies & Annand, 2019). Walmart reported a CA of $90,067M in FY 2021, an increase from $61,806M. Alibaba, on the other hand, reported $ 98,196M, an increase from $65,377M. Alibaba has high and increasing current assets than Walmart to finance short-term obligations.
The second item is current liabilities which is important as they provide useful information about the financial state of the company to an investor. Walmart reported current liabilities of $ 92,645M in 2021, an increase from $77,790M. Alibaba had current liabilities of $57,596M in FY 2021, an increase from $35,916M. Although both companies have increasing current liabilities, Walmart reports high current liabilities than Alibaba.
The third item is cash and cash equivalent. They are important because they help the company finance working capital needs (Dauderies & Annand, 2019). Walmart reported a value of $17,741M in FY 2021, an increase from $9,465M. Alibaba, on the other hand, had $73,788M in FY 2021, an increase from $55,437M. Both companies have increasing cash and cash equivalents; however, Alibaba reports a high value compared to Walmart.
Analysis based on the income statement and balance sheet
Based on the income statement, Walmart has high revenue and operating income compared to Alibaba, while Alibaba has high Net income than Walmart. Generally, the nature of the income statement of the two companies is good; however, Walmart can be considered much better than Alibaba. According to the balance sheet, Alibaba reports high cash and cash equivalents, high current assets, and low current liabilities than Walmart. The financial state of Alibaba based on a balance sheet is better than Walmart
Financial statement analysis essay assignment
RUBRIC |
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Excellent Quality 95-100%
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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. |
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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. |
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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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Financial statement analysis essay assignment