AFA 300 Chapter Notes - Chapter 5: Cash Flow, Interest Expense
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A fire destroyed your firmâs ending balance sheet and income statement after the year-end
but before the financial statements are released. However, you have been successful in obtaining the
numbers for the beginning balance sheet and the statement of cash flows, which are provided to you and
your team members in Excel format. Fields representing the missing balance sheet and income statement
are End of year2 in the Excel sheet
CONSOLIDATED BALANCE SHEETS (USD $) | End of year 2 | End of year 1 | |
In Thousands, unless otherwise specified | |||
Current assets: | |||
Cash and cash equivalents | ã | 598 | |
Receivables, net | ã | 230 | |
Inventories, net | ã | 2309 | |
Other current assets | ã | 47 | |
Total current assets | ã | 3184 | |
Property and equipment, net of accumulated depreciation | ã | 1292 | |
Assets held for sale | ã | 1 | |
Goodwill | ã | 76 | |
Intangible assets, net | ã | 29 | |
Other assets, net | ã | 32 | |
Assets, Total | ã | 4614 | |
Current liabilities: | ã | 0 | |
Current portion of long-term debt | ã | 0 | |
Accounts payable | ã | 2030 | |
Accrued expenses | ã | 380 | |
Other current liabilities | ã | 150 | |
Total current liabilities | ã | 2560 | |
Long-term debt | ã | 604 | |
Other long-term liabilities | ã | 239 | |
Commitments and Contingencies | ã | 0 | |
Stockholders Equity Attributable to Parent [Abstract] | ã | 0 | |
Preferred stock, nonvoting, $00001 par value | ã | 0 | |
Common stock, voting, $00001 par value | ã | 0 | |
Additional paid-in capital | ã | 520 | |
Treasury stock, at cost | ã | -27 | |
Accumulated other comprehensive income (loss) | ã | 3 | |
Retained earnings | ã | 715 | |
Total stockholders equity | ã | 1210 | |
Liabilities and Stockholders Equity, Total | ã | 4613 | |
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Year 2 | ||
Net sales | ã | ||
Cost of sales, including purchasing and warehousing costs | ã | ||
Gross profit | ã | ||
Selling, general and administrative expenses | ã | ||
Operating income | ã | ||
Interest expense | ã | ||
Other income, net | ã | ||
Total other, net | ã | ||
Income before provision for income taxes | ã | ||
Provision for income taxes | ã | ||
Net income | ã | ||
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Year 2 | ||
Cash flows from operating activities: | |||
Net income | $392 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 208 | ||
Share-based compensation | 13 | ||
Loss on property and equipment, net | 1 | ||
Other | 2 | ||
Provision for deferred income taxes | -2 | ||
Excess tax benefit from share-based compensation | -16 | ||
Increase Decrease in Operating Capital | |||
Receivables, net | -32 | ||
Inventories, net | -204 | ||
Other assets | 11 | ||
Accounts payable | 113 | ||
Accrued expenses | 63 | ||
Other liabilities | -4 | ||
Net cash provided by operating activities | 545 | ||
Cash flows from investing activities: | |||
Purchases of property and equipment | -196 | ||
Payments to Acquire Businesses, Gross | -186 | ||
Sale of certain assets of acquired business | 19 | ||
Proceeds from sales of property and equipment | 1 | ||
Net cash used in investing activities | -362 | ||
Cash flows from financing activities: | |||
(Decrease) increase in bank overdrafts | -3 | ||
Decrease in financed vendor accounts payable | 0 | ||
Issuance of senior unsecured notes | 449 | ||
Payment of debt related costs | -9 | ||
Borrowings under credit facilities | 0 | ||
Payments on credit facilities | 0 | ||
Dividends paid | -18 | ||
Proceeds from the issuance of common stock, primarily exercise of stock options | 4 | ||
Tax withholdings related to the exercise of stock appreciation rights | -22 | ||
Excess tax benefit from share-based compensation | 16 | ||
Repurchase of common stock | -81 | ||
Contingent payment accrued on acquisitions | 5 | ||
Other | -1 | ||
Net cash provided by (used in) financing activities | 331 | ||
Net increase (decrease) in cash and cash equivalents | 514 | ||
Cash and cash equivalents, beginning of period | 598 | ||
Cash and cash equivalents, end of period | 1,112 | ||
Supplemental cash flow information: | |||
Interest paid | 35 | ||
Income tax payments | 219 | ||
Non-cash transactions: | |||
Accrued purchases of property and equipment | 21 | ||
Retirement of common stock | 0 | ||
Contingent consideration accrued on acquisitions | 0 | ||
Changes in other comprehensive income | 1 | ||
Declared but unpaid cash dividends | $4 |
Perform a vertical and horizontal analysis of Wal-Mart Stores,Inc.âs income statements and balance sheets as of January 31, 2015.In performing this analysis, consider any notable trends or changesthat you observe that may provide useful information concerning itsfinancial condition. Also use as many yearsâ worth of statements asyou feel necessary.
WAL MART STORESINC | ||||
10-K | ||||
Statement of CashFlows | ||||
(Amounts in millions) | ||||
Fiscal Year Ended January 31, | 2015 | 2014 | 2013 | 2012 |
Cash flows from operating activities: | ||||
Consolidated net income | $17,099 | $16,695 | $17,756 | $16,387 |
(Income) Loss from discontinuedoperations, net of tax | (285) | (144) | (52) | 21 |
Income from continuing operations | 16,814 | 16,551 | 17,704 | 16,408 |
Adjustments to reconcileincome from continuing operations to net cash provided by operatingactivities | ||||
Depreciation and amortization | 9,173 | 8,870 | 8,478 | 8,106 |
Deferred income taxes | (503) | (279) | (133) | 1,050 |
Other operating activities | 785 | 938 | 602 | 468 |
Changes in certain assets and liabilities,net of effects of acquisitions: | ||||
Increase in accounts receivable | (569) | (566) | (614) | (796) |
Increase in inventories | (1,229) | (1,667) | (2,759) | (3,727) |
Increase in accounts payable | 2,678 | 531 | 1,061 | 2,687 |
Increase in accrued liabilities | 1,249 | 103 | 271 | 30 |
(Decrease) Increase in accrued incometaxes | 166 | (1,224) | 981 | 29 |
Net cash provided by operatingactivities | 28,564 | 23,257 | 25,591 | 24,255 |
Cash flows from investing activities: | ||||
Payments for property and equipment | (12,174) | (13,115) | (12,898) | (13,510) |
Proceeds from disposal of property andequipment | 570 | 727 | 532 | 580 |
Proceeds from disposal of certainoperations | 671 | 0 | 0 | 0 |
Other investing activities | (192) | (138) | (271) | (3,679) |
Net cash used in investingactivities | (11,125) | (12,526) | (12,637) | (16,609) |
Cash flows from financing activities: | ||||
Net change in short-term borrowings | (6,288) | 911 | 2,754 | 3,019 |
Proceeds from issuance of long-termdebt | 5,174 | 7,072 | 211 | 5,050 |
Payment of long-term debt | (3,904) | (4,968) | (1,478) | (4,584) |
Dividends paid | (6,185) | (6,139) | (5,361) | (5,048) |
Purchase of Company stock | (1,015) | (6,683) | (7,600) | (6,298) |
Dividends paid to noncontrollinginterest | (600) | (426) | (282) | (526) |
Purchase of noncontrolling interest | (1,844) | (296) | (132) | 0 |
Other financing activities | (409) | (260) | (58) | (71) |
Net cash used in financingactivities | (15,071) | (10,789) | (11,946) | (8,458) |
Effect of exchange rates on cash | (514) | (442) | 223 | (33) |
Net (decrease) increase in cash and cashequivalents | 1,854 | (500) | 1,231 | (845) |
Cash and cash equivalents at beginning ofyear | 7,281 | 7,781 | 6,550 | 7,395 |
Cash and cash equivalents at endof year | $9,135 | $7,281 | $7,781 | $6,550 |
Supplemental disclosure of cash flowinformation | ||||
Income tax paid | 8,169 | 8,641 | 7,304 | 5,889 |
Interest paid | 2,433 | 2,362 | 2,262 | 2,346 |
Assess Wal-Mart, Stores Inc. concerning liquidity, solvency,profitability, and stock performance as of January 31, 2015. Foreach area, you should calculate the ratios we discussed in classand provide an analysis of the ratios calculated. I includehistorical stock price information and outstanding common shareinformation below.
WAL MART STORES INC | |||||||||||||||||||
10-K | |||||||||||||||||||
Statement of CashFlows | |||||||||||||||||||
(Amounts in millions) | |||||||||||||||||||
Fiscal Year Ended January 31, | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Consolidated net income | $17,099 | $16,695 | $17,756 | $16,387 | |||||||||||||||
(Income) Loss from discontinuedoperations, net of tax | (285) | (144) | (52) | 21 | |||||||||||||||
Income from continuing operations | 16,814 | 16,551 | 17,704 | 16,408 | |||||||||||||||
Adjustments to reconcileincome from continuing operations to net cash provided by operatingactivities | |||||||||||||||||||
Depreciation and amortization | 9,173 | 8,870 | 8,478 | 8,106 | |||||||||||||||
Deferred income taxes | (503) | (279) | (133) | 1,050 | |||||||||||||||
Other operating activities | 785 | 938 | 602 | 468 | |||||||||||||||
Changes in certain assets and liabilities,net of effects of acquisitions: | |||||||||||||||||||
Increase in accounts receivable | (569) | (566) | (614) | (796) | |||||||||||||||
Increase in inventories | (1,229) | (1,667) | (2,759) | (3,727) | |||||||||||||||
Increase in accounts payable | 2,678 | 531 | 1,061 | 2,687 | |||||||||||||||
Increase in accrued liabilities | 1,249 | 103 | 271 | 30 | |||||||||||||||
(Decrease) Increase in accrued incometaxes | 166 | (1,224) | 981 | 29 | |||||||||||||||
Net cash provided by operatingactivities | 28,564 | 23,257 | 25,591 | 24,255 | |||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Payments for property and equipment | (12,174) | (13,115) | (12,898) | (13,510) | |||||||||||||||
Proceeds from disposal of property andequipment | 570 | 727 | 532 | 580 | |||||||||||||||
Proceeds from disposal of certainoperations | 671 | 0 | 0 | 0 | |||||||||||||||
Other investing activities | (192) | (138) | (271) | (3,679) | |||||||||||||||
Net cash used in investingactivities | (11,125) | (12,526) | (12,637) | (16,609) | |||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Net change in short-term borrowings | (6,288) | 911 | 2,754 | 3,019 | |||||||||||||||
Proceeds from issuance of long-termdebt | 5,174 | 7,072 | 211 | 5,050 | |||||||||||||||
Payment of long-term debt | (3,904) | (4,968) | (1,478) | (4,584) | |||||||||||||||
Dividends paid | (6,185) | (6,139) | (5,361) | (5,048) | |||||||||||||||
Purchase of Company stock | (1,015) | (6,683) | (7,600) | (6,298) | |||||||||||||||
Dividends paid to noncontrollinginterest | (600) | (426) | (282) | (526) | |||||||||||||||
Purchase of noncontrolling interest | (1,844) | (296) | (132) | 0 | |||||||||||||||
Other financing activities | (409) | (260) | (58) | (71) | |||||||||||||||
Net cash used in financingactivities | (15,071) | (10,789) | (11,946) | (8,458) | |||||||||||||||
Effect of exchange rates on cash | (514) | (442) | 223 | (33) | |||||||||||||||
Net (decrease) increase in cash and cashequivalents | 1,854 | (500) | 1,231 | (845) | |||||||||||||||
Cash and cash equivalents at beginning ofyear | 7,281 | 7,781 | 6,550 | 7,395 | |||||||||||||||
Cash and cash equivalents at endof year | $9,135 | $7,281 | $7,781 | $6,550 | |||||||||||||||
Supplemental disclosure of cash flowinformation | |||||||||||||||||||
Income tax paid | 8,169 | 8,641 | 7,304 | 5,889 | |||||||||||||||
Interest paid | 2,433 | 2,362 | 2,262 | 2,346 | |||||||||||||||