Wal-Mart Stores, Inc - Research Paper Example

The paper "Wal-Mart Stores, Inc" is an outstanding example of a business research paper. Wal-Mart Stores, Inc. is the number one retailer in the United States as of 2010. It has recorded sales of $304,939,000,000 generated from its 4,304 stores. At this period, Wal-Mart had realized a net income of $21,034,000,000 (Schultz, David, 2010). In 2010, the total number of employees of the company is 2 million. It is a publicly listed company in the NYSE and its latest stock quote is $55.10 (money central. 2010) Wal-Mart operates in three business segments: Wal-Mart U.S., Wal-Mart International and Sam’s Club.

At the close of 2010 fiscal year, the Wal-Mart U.S segment claims 63.85% of its net sales. The Wal-Mart US segment manages the retail stores in different format of operations in the U.S. including an online retail operation, available at walmart.com. The retail operations abroad that include Mexico, Britain, Japan, Canada, Germany, China, and Puerto Rico, are managed by the International segment and have generated 24.7% net sales. This segment handles a different format of stores and restaurants as well as discount stores and supercenters.

Sam’s Club operates under a warehouse club format both outside and inside United States. Sam’s Club is an exclusive membership club that is also available for on line retail operations. This segment has contributed 11.5% net sales for Wal-Mart. This giant store has plans for further expansion, as Economist.com stated that Wal-Mart has served only 8% of the total retail sales in America. The guiding principles that led the company to its present stature are advocated by its late founder Sam Walter, “to pass savings won from suppliers to consumers to encourage them to shop and buy more”.

It has also promoted a policy of “always low prices, always”. Its biggest worry is trade unions, well-established rivals and upward pressure on prices. Wal-mart sources its supplies both from local US suppliers and others from China, where they are cheap.The investment returns ratio of Wal-Mart for 2010 is compared with the industry and the benchmark figures of S& P 500. Ratio comparison provides an investor an idea of how the company is performing as against the companies in the same industry of retail stores.

Investors are always interested to know how much is the return for an investment and as shown from the table above, Wal-mart fares well when compared in the industry and that of the S&P 500 benchmark. The company has higher percentage of ROE, ROA and ROC. Wal-Mart Financial statement shows that growth rate in sales is lower as compared with the industry, but has a net income much higher than the competition; it also pays a higher dividend to stockholders than the industry. (see attached table).

Net income for the 5 year period of operation from 2006 to 2010 stays on an upward trend. Aside from cost of sales, selling and administrative expenses, there are no other expenses that could further dilute the income. Current P/E ratio is lower than competitor and S&P 500s that means investor is paying less for the each unit of income. The above ratios show advantage points for an investor who is looking for a solid base of investments from within the industry sector of retail industry.