Disclosure Analysis Paper

Disclosure Analysis Paper

Cindy Chastain

ACC/422

November 19, 2012

Frank Drabik

Disclosure Analysis Paper

Wal-Mart is currently one of the largest retail giants. This organization has numerous investors who are very conscientious of Wal-Mart’s annual financial statement. With any company, the financial statements are the most important part for investors and business owners. According to “Investopedia”, financial statements are records that outline the financial activities of a business. The financial statements are vital to maintaining accurate and honest accounting for businesses. Financial statements are required to supply explanations of specific items. These explanations are referred to as Notes to the Financial Statements, or footnotes. Three of these specific items are cash and cash equivalents, receivables, and inventories.

Cash and cash equivalents, receivables, and inventories are located on the consolidated balance sheet. These balance sheet items are represented under the current asset column. Current assets are items which can be easily converted to cash. Current assets are important to any business because they are used to pay for operations and expenses.

Cash and cash equivalents consists of either currency or cash equivalents items such as bank accounts, securities, and treasury bills. According to the Notes to Consolidated Financial Statements section of the 2012 Wal-Mart Annual report, the cash and cash equivalents listed some pertinent information valuable to the investors. This section stated the fact that Wal-Mart considers investments with a maturity of three (3) months or less to be cash equivalent. Credit cards, debit cards, and other electronic transfer transactions are processed within seven (7) days and are also cash and cash equivalents. Wal-Mart stated the amounts due from banks for these different types of electronic transactions, which are classified as cash, totaled $1.2 billion at January 31, 2012. The...