The following table gives abbreviated balance sheets and income statements for Walmart. At the end of fiscal 2017, Walmart had 3,060 million shares outstanding with a share price of $146. The company's weighted-average cost of capital was about 5%. Assume a tax rate of 35%.   Balance Sheet (figures in $ millions)   End of Year   Start of Year Assets           Current assets:           Cash and marketable securities $ 6,956   $ 7,067 Accounts receivable   5,814     6,035 Inventories   43,983     43,246 Other current assets   3,711     2,141 Total current assets $ 60,464   $ 58,489 Fixed assets:           Net fixed assets $ 115,018   $ 114,378 Other long-term assets   30,240     27,158 Total assets $ 205,722   $ 200,025 Liabilities and Shareholders' Equity           Current liabilities:           Accounts payable $ 46,292   $ 41,633 Other current liabilities   32,629     25,695 Total current liabilities $ 78,921   $ 67,328 Long-term debt   37,025     42,218 Other long-term liabilities   11,507     12,281 Total liabilities $ 127,453   $ 121,827 Total shareholders' equity   78,269     78,198 Total liabilities and shareholders’ equity $ 205,722   $ 200,025             Income Statement (figures in $ millions) Net sales $ 500,543   $ 486,073 Cost of goods sold   373,596     361,456 Selling, general, and administrative expenses   96,181     91,973 Depreciation   10,729     10,280 Earnings before interest and taxes (EBIT) $ 20,037   $ 22,364 Interest expense   2,378     2,467 Taxable income $ 17,659   $ 19,897 Tax   4,600     6,964 Net income $ 13,059   $ 12,933 Dividends   6,324     6,895 Addition to retained earnings $ 6,735   $ 6,038     a. Calculate the market value added. (Do not round intermediate calculations. Enter your answer in millions rounded to nearest whole number.) b. Calculate the market-to-book ratio. (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Calculate the economic value added. (Do not round intermediate calculations. Enter your answer in millions rounded to nearest whole number.) d. Calculate the return on start-of-the-year capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
icon
Related questions
Question

The following table gives abbreviated balance sheets and income statements for Walmart. At the end of fiscal 2017, Walmart had 3,060 million shares outstanding with a share price of $146. The company's weighted-average cost of capital was about 5%. Assume a tax rate of 35%.

 

Balance Sheet (figures in $ millions)
  End of Year   Start of Year
Assets          
Current assets:          
Cash and marketable securities $ 6,956   $ 7,067
Accounts receivable   5,814     6,035
Inventories   43,983     43,246
Other current assets   3,711     2,141
Total current assets $ 60,464   $ 58,489
Fixed assets:          
Net fixed assets $ 115,018   $ 114,378
Other long-term assets   30,240     27,158
Total assets $ 205,722   $ 200,025
Liabilities and Shareholders' Equity          
Current liabilities:          
Accounts payable $ 46,292   $ 41,633
Other current liabilities   32,629     25,695
Total current liabilities $ 78,921   $ 67,328
Long-term debt   37,025     42,218
Other long-term liabilities   11,507     12,281
Total liabilities $ 127,453   $ 121,827
Total shareholders' equity   78,269     78,198
Total liabilities and shareholders’ equity $ 205,722   $ 200,025
           
Income Statement (figures in $ millions)
Net sales $ 500,543   $ 486,073
Cost of goods sold   373,596     361,456
Selling, general, and administrative expenses   96,181     91,973
Depreciation   10,729     10,280
Earnings before interest and taxes (EBIT) $ 20,037   $ 22,364
Interest expense   2,378     2,467
Taxable income $ 17,659   $ 19,897
Tax   4,600     6,964
Net income $ 13,059   $ 12,933
Dividends   6,324     6,895
Addition to retained earnings $ 6,735   $ 6,038
 

 

a. Calculate the market value added. (Do not round intermediate calculations. Enter your answer in millions rounded to nearest whole number.)

b. Calculate the market-to-book ratio. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

c. Calculate the economic value added. (Do not round intermediate calculations. Enter your answer in millions rounded to nearest whole number.)

d. Calculate the return on start-of-the-year capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

 
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education