SU_FIN4060_W3_CP_Marquez_A

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Week Three Anastasia Marquez FIN4060- Financial Statement Analysis SU01 Professor Keith Davis December 11, 2023

One of the biggest distribution networks in the world is Walmart. Its logistics include over 7500 drivers, 56,000 trailers, and close to 6800 tractors. Conveyor belts extending 12 miles across a distribution center can move thousands of cases through the building every day. A few centers are also established to provide the impacted populace with prompt assistance during a natural disaster. Walmart adopted technology to provide its customers with more affordable prices. Utilizing technology, which allows stores to track inventory and replenish the shelves, made it extremely effective. The world's largest private company in terms of IT infrastructure is Walmart. Its technology aids in managing customer relationships, tracking, and forecasting inventory levels, and predicting demand. Target has a stellar reputation as a trustworthy retailer and offers a wide range of benefits to its customers, including a generous and flexible return policy. Target's recognizable stores can be found in all 50 states. Target's existence in the United States came to an end in 2018 when Vermont became the last state to welcome a store. Target has a significant impact, as evidenced by the fact that 75% of Americans live ten miles or less from a Target store. Even though Target Corporation is a worldwide company with offices in places like Japan, India, and Vietnam, there are no Target retail locations outside of the United States. The biggest segment, Walmart U.S., consists of three main store formats in addition to digital retail. Walmart U.S. has consistently had the highest gross profit as a percentage of net sales among our three reportable segments. Furthermore, historically speaking, it has made the biggest contributions to the company's operating income and net sales. Walmart International is the name given to our operations outside of the United States, which include wholesale, retail, and other ventures. Supercenters, supermarkets, hypermarkets, warehouse clubs—including Sam's Clubs—cash and carry, home improvement, specialty electronics,

clothing stores, pharmacies, convenience stores, and digital retail are just a few of the many formats that make up these businesses. Due to its merchandise mix, Walmart International's overall gross profit rate is lower than Walmart U.S.'s. Our second-largest segment, Walmart International, has increased through acquisitions, the addition of retail, wholesale, and other businesses, as well as the development of digital retail. Sam's Club offers both digital retail and warehouse clubs that are exclusive to members. Since the warehouse club is exclusive to members, membership revenue accounts for a sizeable portion of the operating income for the segment. Compared to our other segments, Sam's Club has a lower gross profit rate and lower operating expenses as a percentage of net sales. Target Corp. is now an omnichannel company rather than just a brick-and-mortar store. To contend with players in pure e-commerce, it has been updating the supply chain. its acquisition of Shipped to offer same-day delivery of various products, including groceries, necessities, electronics, and home goods. Target offers a wide selection of owned and premium branded products, from toys and clothing for men, women, and children to household necessities and electronics. In addition, it stores seasonal goods, auto supplies, home décor and furnishings, food, and pet supplies. Target Café, Target Photo, Target Optical, Portrait Studio, Starbucks, and other food service options are among the in-store amenities it provides. An edited food assortment, comprising perishables, dry grocery, dairy, and frozen items, is offered by a larger percentage of general merchandise stores. Along with a complementary assortment, its digital channels feature a broad merchandise assortment that includes many items found in stores.

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Cash flows from investing activities include lending money and collecting it, as well as buying and selling debt or equity instruments, real estate, machinery, and other useful assets. The net cash utilized by Walmart Inc. for investing activities rose between 2021 and 2022, but then sharply fell between 2022 and 2023. Due to a higher gross margin rate, the company's operating income margin rate for the third quarter of 2022, which stood at 5.2 percent, increased by 1.3 percentage points over the previous year. Disciplined inventory and expense management was evident in the third quarter GAAP and Adjusted EPS1 of $2.10, which was above the upper end of the Company's guidance range and 36% higher than a year ago. Target has produced more than $5.3 billion in operating cash flow through the first three quarters of this year, up from roughly $550 million in 2022. Comparable sales for the third quarter decreased 4.9%, as predicted. Continued growth in frequency categories—most notably in Beauty—partially offset declines in discretionary categories. Over 8% growth in same-day services was driven by a 12 percent increase in drive-up services. At the end of the third quarter, inventory was 14% less than it was the previous year, with a 19% decrease in inventory in the discretionary category. Target will offer over 10,000 new items for the holidays, including thousands of must-have gifts under $25 and thousands of exclusive Target items in a variety of categories, to provide guests with both novelty and value this holiday season. Walmart will describe how its growth investments are expected to change the company's financial profile. These investments will be focused on three main areas: expanding sales through its omni-channel business model; diversifying earnings streams by improving the business mix and categories; and scaling well-proven, high-return investments that increase incremental operating margins and drive operating leverage.

This year, Target intends to invest between $4 and $5 billion to enhance its digital experiences, operations network of stores and supply chain facilities, and guest-centric services, among other capabilities. To streamline its operations following years of explosive growth, the retailer also provided additional details about its plans to advance enterprise efficiency initiatives. Walmart's success can be ascribed to its in-house supply chain, which simplifies fulfillment and reduces expenses. Additionally, it gives them greater command over their logistics system. Examine the Walmart supply chain carefully to see why, even after decades, it is still so successful. Goal Setting themselves apart from the competition with our selection of distinctive owned brands and carefully chosen national brands. putting money into giving their customers a fun, practical, secure, and unique shopping experience. utilizing our stores as fulfillment centers to effectively attend to the needs of their customers, whether they make purchases in-person or online. Value investing is among the most effective investment strategies. This method entails finding cheap stocks with solid fundamentals. A thorough examination of financial statements and market trends can help investors identify stocks that are undervalued.

References Walmart (WMT) cash flow - Investing.com . Investing.com. https://www.investing.com/equities/wal-mart-stores-cash-flow TGT | Target Corp. Annual Cash Flow Statement | MarketWatch . MarketWatch. https://www.marketwatch.com/investing/stock/tgt/financials/cash-flow Dybek, M. (2023, March 18). Walmart Inc. (NYSE: WMT) | Cash Flow Statement . Stock Analysis on Net. https://www.stock-analysis-on.net/NYSE/Company/Walmart-Inc/Financial- Statement/Statement-of-Cash-Flows#:~:text=Investing%20activity%20cash%20flows %20include,significantly%20from%202022%20to%202023. Target Corporation reports third-quarter earnings . (2023, November 15). https://corporate.target.com/press/release/2023/11/target-corporation-reports-third- quarter-earnings Walmart outlines growth strategy and unveils next-generation supply chain at 2023 Investment Community Meeting . (2023, April 4). https://corporate.walmart.com/news/2023/04/04/walmart-outlines-growth-strategy- unveils-next-generation-supply-chain-at-2023-investment-community- meeting#:~:text=Walmart%20will%20outline%20how%20the,proven%2C%20high %2Dreturn%20investments%20that Target unveils 2023 strategic investments to fuel growth and a differentiated guest experience . (2023, February 28). https://corporate.target.com/press/release/2023/02/target-unveils- 2023-strategic-investments-to-fuel

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