Ethics and Complience

In this report Wal-Mart Stores Inc. delivered a very solid financial performance for the fiscal year of 2011. The report shows an increase in net sales by 3.4 % which equals out to $419 billion, operating income rose to 6.4% to reach $25 billion plus. The report also shows earnings per share from continuing operations rose 12% to $4.18 per share. Wal-Mart shows a continued delivery of stable returns on investment of more than 19% for their shareholders. At the end of 2011 Wal-Mart closed out just under $11 billion in free cash flows. “And I’m proud that we returned a record $19.2 billion to shareholders through dividends and share repurchases” (Michel T. Duke, Wal-Mart Store, Inc.).

For fiscal years 2011 and 2010 Wal-Mart return on investment held stable at 19.2 % and 19.3 %, but because of balancing long-term initiatives and short-term affects the trend in return on investments has fluctuated some. The formula Wal-Mart uses to calculate their return on investment is adjusted operating income (including interest income, depreciation, amortization, and rentx8) for a fiscal year divided by an average invested capital for the same period. The average invested capital they use is the average of the beginning and ending numbers of total assets of continuing operations added to the accumulated depreciation less its accounts payable and liabilities for that time frame. Calculations $35365/$184365=19.2 % (0.19177) 2010 $33148/$171334=19.3% (0.19340)

Even though the return on investment is a simple calculation to use, it is also a non-GAAP financial measure. Wal-Mart considers the return on asset a financial measure they can rely on. It is in accordance with GAAP rules and is the most directly comparable financial measure to the return on investment for their industry. The return on assets for 2011 and 2010 was respectfully at 9.1% and 9.0%. This calculated by the income from continuing operations over average total assets of continuing operations. Calculations...