Walmart

Walmart Company Report

Net margin profit, which indicated company’s overall profitability, is 3.78 percent. This number is below average, which is supposed to be between 5-25 percent. Gross profit margin is over 24 percent. This is a good indication of efficiency of production, since it takes into account only variable costs. The large difference between the net profit margin and the gross profit margin can indicate inefficiency in usage of fixed costs, such as storage and long term rent.

Return on assets is 8.83% which shows a good use of equipment and resources. Additionally, return on investment is 23.28%. That shows a firm and responsive grip over investments (using new equity efficiently, thus maximizing profits).

Walmart is definitely heading in the right direction. Over the last year, net profit has grown by 6.6% and net sales by 3.37%. Although net profit margin isn’t very encouraging, nevertheless, it has grown too over the last year by 3.18%.

The relatively sharp increase of return on investment is easily understood looking at Walmart’s balance sheet. The net income has increased, which is not unexpected. On the other hand, equity has decreased, specifically in common stock and retained earnings. These entries indicate the company paid dividends on 2011, thus reducing retained earnings (despite an increase in net income), and a large purchase of stock by the company itself. Both higher dividends and repurchasing are positive signs of company management optimism in future profitability. The increase in annual dividend was announced by the company in 2011:[1]

Wal-Mart Stores, Inc. Increases Annual Dividend

Wal-Mart Stores, Inc. announced that the Board of Directors has approved an annual dividend of $1.46 per share, a 21% increase from the $1.21 per share paid during fiscal year 2011. For the current fiscal year ending January 31, 2012, the annual dividend of $1.46 per share will be paid in four quarterly installments of $0.3650...