Wal-Mart 2014 financial statement review Summarize and include the organization\
ID: 2455774 • Letter: W
Question
Wal-Mart 2014 financial statement review Summarize and include the organization's financial statements. Analyze the corporation's most recent financial statements and answer the following: How are the corporation's debt securities reported on the financial statements? How are the corporation's stock investments reported on the financial statements? Why would the corporation invest in stocks and debt securities? What are the corporation's relative risks and rewards of equity versus debt securities? What is the difference between equity and debt securities? Use the organization's financial statements to determine its financial health. Identify examples from the organization's financial statements to justify the team's responses. Wal marts financial statement for 2014 http://cdn.corporate.walmart.com/66/e5/9ff9a87445949173fde56316ac5f/2014-annual-
Explanation / Answer
Debt securities:
As of January 31, 2014, our variable rate borrowings, including the effect of our commercial paper and interest rate swaps, represented 18% of our total short-term and long-term debt. Based on January 31, 2014 debt levels, a 100 basis point change in prevailing market rates would cause our annual interest costs to change by approximately $78 million. Short-term borrowings consist of commercial paper and lines of credit. Short-term borrowings outstanding at January 31, 2014 $7.7 billion.The Company has various lines of credit, committed with 24 financial institutions, totaling $17.3 billion as of January 31, 2014.
Investments in the stock of other companies during 2014 amounted to USD 15 million. investments in stock is made to become a shareholder and acquire the voting rights, and in debts to earn regular flow of income.
Debt investments tend to be less risky than equity investments but usually offer a lower but more consistent return. They are less volatile than common stocks, with fewer highs and lows than the stock market. The bond and mortgage market historically experiences fewer price changes, for better or worse, than stocks. Also, should a corporation be liquidated, bondholders are paid first. Mortgage investments, like other debt instruments, come with stated interest rates and are backed up by real estate collateral.
Fortunes can be made or lost with equity investments. Any stock market can be volatile, with rapid changes in share values. Often, these wide price swings are not based on the solidity of the organization backing them up but by political, social or governmental issues in the home country of the corporation. Equity investments are a classic example of taking on higher risk of loss in return for potentially higher reward.
Financial health can be deteremined by the looking into the following factors:
Trend in Net income over years: the coporations net income has been stable around USD 15K to 16K Million over 2011 to 2014.
working capital of the company (i.e.) excess of current assets over current liabilities:
Current asset: 61,185- minus current liabilities 69,345 (its a negative working captial of 8160 million.
trends in sales revenue and investment in fixed assets are also some indicators of the financial health of the companies.
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