walmart and amazon

1 A Comparative Company Financial Analysis of Walmart and Amazon Name of Student Institutional Affiliation Course Instructor’s Name Date

2 Introduction: Walmart Corporation 3 Impact of Financial Statements on Decision Making 3 Walmart Corporation vs. Amazon Inc. Balance Sheet Analysis 5 Walmart vs. Amazon Income Statement Analysis 8 Walmart vs. Amazon Statement of Cash Flows 10 Financial Ratios 13 What do the Financial Ratios tell us? 16 Conclusion 16 References 18

4 liabilities, equity, financial status, and capital structure and the income statement to understand the company's revenues, costs, and profitability trends . Based on these variables, investors may acquire, hold, or sell firm shares . Decisions About Credit and Lending: Financial statements are used by lenders and other financial organizations to evaluate a company's creditworthiness and the risk of giving money to it. Financial ratios are looked at to evaluate the company's ability to fulfill debt commitments . Lenders look at the statement of cash flows to understand how the firm manages and generates its cash flow . Based on these analyses, lenders may choose loan terms, conditions, and interest rates . Strategic Choices and Business Expansion: Decisions about corporate growth, strategic alliances, and mergers and acquisitions need access to financial statements. For instance, a business might examine the financial accounts of the target firm to learn more about its financial health, possible synergies, and dangers. Financial statements assist companies in assessing their financial standing and making defensible choices about growing operations, expanding into new markets, or launching new products. Relationships with Vendors and Suppliers: Suppliers and vendors review their financial accounts to determine if a firm is financially stable and capable of fulfilling its responsibilities. By looking at their client's financial situation, providers may establish the credit terms, limitations, and exchange credit they will provide. By providing this information, suppliers may determine whether or not to sign long-term contracts with the business, lowering the risk of non-payment . Making decisions internally: Management analyzes financial accounts to assess the success of their plans, pinpoint areas for improvement, and make strategic, operational choices. Management may efficiently allocate resources, spot chances for cost reductions, and determine the profitability of different product lines by evaluating financial data.

5 Walmart Corporation vs. Amazon Inc. Balance Sheet Analysis

7 priorities. Examining Walmart's and Amazon's balance sheets reveals interesting patterns and insights . First, Amazon's total assets have grown significantly, rising from $225,248,000 in 2019 to an impressive $462,675,000 in 2022. Major investments in fixed assets like infrastructure and technology are primarily responsible for this remarkable growth. However, Walmart's total assets have increased steadily, albeit more moderately, from $219,295,000 in 2019 to $236,495,000 in 2020 (Walmart, 2023) . The expansion of their equipment, property, and other long-term assets is to blame for this expansion. Looking at the current assets, it becomes clear that Amazon's figures have fluctuated. After reaching a high of $161,580,000 in 2021, there was a slight decline to $146,791,000 in 2022. Changes in short-term investments and the components of current assets, specifically cash and cash equivalents, are primarily responsible for these fluctuations. In contrast, Walmart's current assets have increased marginally from $61,806,000 in 2019 to $61,897,000 in 2020, remaining relatively stable (Walmart, 2023) . Receivables, inventories, and cash and cash equivalents contribute to Walmart's current assets. When it comes to long-term assets, Amazon's expansion is particularly impressive. The significant investments made in fixed assets, such as property, equipment, and infrastructure, which are necessary for the company's operations, have largely contributed to the significant growth of the company's long-term assets. Similarly, Walmart's long-term assets, including property and equipment, have consistently risen. This vertical pattern mirrors the organization's obligation to put resources into actual resources to help its growing activities. According to the liabilities section, Amazon ’s total liabilities have increased significantly from $163,188,000 in 2019 to $316,632,000 in 2022. The rise in accounts payable and other current liabilities is to blame for this surge. On the other hand, Walmart has kept its total liabilities relatively stable, increasing slightly from $77,477,000 in 2019 to $81,552,000 in 2020 (Walmart, 2023) . This demonstrates how well the company manages its liabilities to align with its growth. When looking at equity, it becomes clear that Walmart and Amazon have demonstrated strong

8 financial positions and increased shareholder equity. Amazon's stockholders' equity has consistently increased from $62,060,000 in 2019 to $146,043,000 in 2022 (AMZN, 2023) . Increased capital surplus and retained earnings are primarily responsible for this expansion. Similarly, Walmart's shareholders' equity grew steadily, reaching $81,552,000 in 2020 from $72,496,000 in 2019. Both businesses' increased equity demonstrates their capacity to create and preserve shareholder value. With growing total assets and equity, Walmart and Amazon have demonstrated solid financial positions. Walmart has maintained a more steady growth rate with a focus on property and equipment. In contrast, Amazon's rapid expansion in total assets can be attributed to its substantial investments in fixed assets. Both businesses have consistently increased shareholder equity while effectively managing their liabilities. These observations reinforce Amazon and Walmart's positions as leading industry players by demonstrating their financial strength and stability.

10 ) AMZN, 2023 ( A company's revenues, expenses, gains, and losses over a particular period are summarized in the income statement, also called the profit and loss statement. By comparing their income statements, we can compare Walmart's and Amazon's revenue sources, cost structures, profitability, and growth patterns . This analysis helps stakeholders comprehend the competitive dynamics between these two industry leaders and identify trends that may affect their financial performance. The pay explanations of Walmart and Amazon give experiences into their monetary exhibition throughout the long term. Starting with Walmart, the company saw steady growth in its total revenues, which increased to $523,964,000 in 2020 from $495,761,000 in 2018 (Walmart, 2023) . This rise in revenue can be attributed to higher membership, other income, and net sales. Over time, Walmart's operating income was impacted by an increase in its cost of sales and its operating, selling, general, and administrative expenses. Nonetheless, Walmart maintained a positive operating income despite these expenses, demonstrating its profitability. The corporation's overall revenue climbed dramatically from $280,522,000 in 2019 to $513,983,000 in 2022, as shown by Amazon's income statement (AMZN, 2023). The company's success in several industries, including cloud computing, digital content services, and e-commerce,

11 may be credited with this significant development. The fact that Amazon's gross profit margin continuously remains high even after considering the cost of sales is evidence of the company's capacity to make sizable profits. Additionally, the business has made significant R&D investments , aiding its innovation and expansion. The costs associated with Walmart's sales, general, and administrative operations have grown over time due to infrastructure, technology, and marketing expenditures . Meanwhile, Amazon's sales, general, and administrative expenses have risen and will total $212,904,000 in 2022 (AMZN, 2022). These expenses are necessary for Amazon's growth and expansion into new markets. Both Walmart and Amazon have shown profitability in terms of net income. Walmart's combined net income will increase to $15,201,000 in 2020 from $10,523,000 in 2019. Amazon's net income climbed from $2,722,000 in 2019 to $11,588,000 in 2022 (AMZN, 2023). These favorable net income numbers illustrate the prosperity and performance of enterprises. Importantly, by concentrating on important numbers like sales, costs, and net income, Walmart's and Amazon's income statements provide a glimpse of their financial performance. To better comprehend the financial health and performance of the firms, a deeper examination should consider other financial measures, including profits per share, return on investment, and cash flow.

13 (Walmart, 2023)

14 (AMZN, 2023) The cash flow statement shows the operating, investing, and financing cash inflows and outflows of a business. This section analyzes Walmart and Amazon's cash-generating capabilities, investment activities, and financing methods using their respective statements of cash flows. This research reveals their capacity to earn and manage cash and commitment to building long-term value. The funds earned and used by Walmart and Amazon throughout the designated periods are specifically described in the cash flow statements of both firms. The fact that Walmart earned positive cash flows from operating activities shows how profitable the company's primary businesses were. Walmart's operational operations generated a net cash flow of $25,255 million in 2020, up from $15,872 million in 2018 (Walmart, 2023). Changes in some assets and liabilities, an increase in net income, and adjustments for depreciation and amortization account for this rise. Additionally, Walmart invested in property and equipment, resulting in cash flows of $10,051 million in 2020. Regarding Amazon's cash flow statement, the company showed strong cash flows from its operations. Amazon reported $46,752 million in net cash from operating activities in 2022, a substantial increase from $38,514 million in 2019 (AMZN, 2023). Higher net income and

16 12/31/2022 94% 82% 12/31/2021 114% 93% 12/31/2020 105% 97% 12/31/2019 110% 79% Quick Ratio 12/31/2022 72% 21% 12/31/2021 91% 28% 12/31/2020 86% 49% 12/31/2019 86% 22% Cash Ratio 12/31/2022 45% 9% 12/31/2021 68% 17% 12/31/2020 67% 19% 12/31/2019 63% 12% Profitability Ratios Gross Margin 12/31/2022 44% 24% 12/31/2021 42% 25% 12/31/2020 40% 25% 12/31/2019 41% 25% Operating Margin 12/31/2022 2% 3% 12/31/2021 5% 5% 12/31/2020 6% 4% 12/31/2019 5% 4% Pre-Tax Margin 12/31/2022 0% 3% 12/31/2021 8% 3% 12/31/2020 6% 4% 12/31/2019 5% 4% Profit Margin 12/31/2022 0% 2% 12/31/2021 7% 2% 12/31/2020 6% 2% 12/31/2019 4% 3% Pre-Tax ROE 12/31/2022 0% 22% 12/31/2021 28% 22% 12/31/2020 26% 25% 12/31/2019 23% 27%

17 After Tax ROE 12/31/2022 0% 15% 12/31/2021 24% 16% 12/31/2020 23% 17% 12/31/2019 19% 20% Price/Earnings & PEG Ratios (Amazon) Price/Earnings Ratio 2022 Actual 183.31 N/A 2023 Estimates 83.43 N/A 2024 Estimates 55.15 N/A 2025 Estimates 38.39 N/A Forecast P/E Growth Rates Growth 2023 120.22 N/A Growth 2024 50.69 N/A P/E Ratios 2023 83.43 N/A P/E Ratios 2024 55.15 N/A PEG Ratio Not provided N/A Price/Earnings & PEG Ratios (Walmart) Price/Earnings Ratio 2023 Actual N/A 24.76 2024 Estimates N/A 25.08 2025 Estimates N/A 22.7 2026 Estimates N/A 20.57 Forecast P/E Growth Rates Growth 2024 N/A -1.24 Growth 2025 N/A 10.49 P/E Ratios 2024 N/A 25.08 P/E Ratios 2025 N/A 22.7 PEG Ratio N/A Not provided What do the Financial Ratios tell us? The market ratio, on the other hand, is a measure of investor sentiment. One can compare Walmart's and Amazon's financial performance and identify their strengths and weaknesses by interpreting these ratios. Walmart and Amazon have covered their short-term liabilities with their current assets by maintaining relatively stable current ratios over time, as shown by the liquidity ratios (Coulon, 2019). However, Walmart has current ratio is slightly higher than Amazon's,

19 profitability. Analyzing the assertion of incomes uncovers that Walmart and Amazon have produced positive incomes from their working exercises, showing their capacity to create cash from their center business activities. Both businesses have also significantly invested in technology, infrastructure, and capital expenditures to support their expansion and operations. A company's financial health and performance can be better understood using financial ratios. Both Walmart and Amazon have demonstrated strong short-term liquidity positions by maintaining relatively stable liquidity ratios, as shown by liquidity ratios. Regarding profitability, efficiency, and leverage ratios, Amazon has outperformed Walmart, indicating better asset management, lower financial risk, and operational effectiveness.

20 References AMZN (2023) Annual Statement , AMZN-20201231 . Available at: https://www.sec.gov/Archives/edgar/data/1018724/000101872421000004/amzn- 20201231.htm (Accessed: 23 June 2023). Bian, Y., Liu, H., Wang, C., & Zou, Y. (2022, July). Comparative Analysis Of Corporate Finance. In 2022 2nd International Conference on Enterprise Management and Economic Development (ICEMED 2022) (pp. 129-133). Atlantis Press. Coulon, Y. (2019). Rational Investing with Ratios: Implementing Ratios with Enterprise Value and Behavioral Finance. Springer Nature. Neebe, K. (2020). Sustainability at Walmart: Success over the long haul. Journal of Applied Corporate Finance , 32 (2), 64-71. https://doi.org/10.1111/jacf.12405 Olayinka, A. A. (2022). Financial statement analysis as a tool for investment decisions and assessment of companies ’ performance. International Journal of Financial, Accounting, and Management , 4 (1), 49-66. Walmart (2023) Market activity-> stocks options ETFs mutual funds indexes commodities cryptocurrency currencies futures fixed income global markets market regulation -> U.S. regulation European regulation quick links real-time quotes after-hours quotes pre-market quotes NASDAQ-100 symbol Screener Online Brokers Glossary Sustainable Bond Network Symbol Change History IPO Performance Ownership Search Dividend History investing lists Fundinsight market events economic calendar earnings IPO calendar dividend calendar spo calendar holiday schedule analyst activity analyst recommendations daily earnings surprise forecast changes commodities -> gold copper crude oil natural gas Nasdaq Data Statistical Milestones Total returns daily market statistics most active see all market activity -> , Nasdaq . Available at: https://www.nasdaq.com/market- activity/stocks/wmt/financials (Accessed: 23 June 2023).