Wal-Mart Corporation - Essay Example

The company has a wide customer base with over 200 million customers served on a weekly basis (Walmart stores).
In 2010 Wal-Mart Corporation achieved sales of $405 billion. This sales figure represents an improvement of 1% in comparison with 2009 and 8.34% in comparison with the fiscal year 2008. These figures are impressive considering that during this period the world was in the middle of a global recession. Typically the retail business is one of the hardest sectors hit during a recession. Wal-Mart was able to keep growing despite the recession. In 2010 Wal-Mart had a return on return on assets of 8.9%. Wal-Mart obtained a small increase in sales in 2010, but its profitability when up a lot. The net income of the company was $14,335 million. The company achieved an increase in net income in 2010 of 6.97%. The cash reserves of the corporation increased from $7,275 million in 2009 to $7907 million in 2010. The total assets of the company went up by 4.45% in 2010.

The debt to equity ratio of the corporation in 2010 was 1.34. This figure is a bit above the normal desirable ratio of 1.0. The industry debt to equity ratio of the retail industry is 0.48 (Dun & Bradstreet). This means that Wal-Mart’s debt to equity ratio is below the industry. Due to the fact that the company is such an established business the company has the ability to finance its operation beyond the norm. The ratio means that the company has chosen to do more of its operations with debt than with equity. The current ratio which measures the company’s ability to pay off its short-term debt is 0.87. The 8.9% return of assets metric of Wal-Mart is much better than the industry norm of 3.6%. In 2010 the company had a return on equity of 19.65%. This figure is much better than the industry norm of 4.2%.

Wal-Mart Corporation is one of the most successful businesses in America. The common stocks of the firm are a good investment. I came to this conclusion not just based on the reputation of the company. The firm was able to increase its profitability in 2010. The cash flow position of the firm is solid. The return on assets and return on investment of the firm are well above the industry standards. I would recommend a potential investor to include the Wal-Mart common stock as part of their investment portfolio.