Comp 2 = Fin Research Walmart’s financial reports for 2019. Complete a 2- to 3-page FAQ/shareholder analysis. Evaluate economic conditions that influence company performance. Consider political,

Walmart's 2019 Financial Analysis

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Walmart's 2019 Financial Analysis

Evaluate economic conditions that influence company performance. Consider political, environmental, currency (money), global economics, and government influence on economic conditions.

Economic conditions are the most responsible for company performance as they include a lot of factors like political stability, environmental regulations etc. Political stability and instability can have an impact on supply chains, trade agreements, and business operations, and this leads to higher or lower costs, revenues, or market access for the company. Environmental regulations may place extra burdens on businesses as far as compliance or compulsory spending on sustainability, which can have an adverse effect on profitability and competitiveness (Dechezleprêtre & Sato, 2017). Currency fluctuations can affect Walmart's international operations, affecting costs of goods, revenues from foreign markets and financial reporting. World economic affairs, such as economic growth or recession, impact consumer spending habits, demand for goods and services, and market conditions that dictate whether companies will make profits or not. Government measures, such as fiscal and monetary policies, taxation, trade agreements, and labor regulations, could have a considerable impact on operating costs, investment choices, and the overall business environment, which determines the financial results of the firm and its strategic decisions.

Compare market conditions with the company’s performance for 2019. Conclude how the market conditions that year influenced the company’s performance, such as interest rates, Federal Reserve Bank monetary policy changes, or other market conditions relevant to the company you selected.

In 2019, the market in which Walmart operated was determined by several factors, including interest rates, changes in the monetary policy of the Federal Reserve Bank, and general economic trends. The decline in the trailing P/E ratio from 52.26 in October 2018 to 21.89 in October 2019 reflects a shift in investor attitude, which could have been triggered by interest rate fluctuations and monetary policy changes (Macrotrends, 2019). Lowering interest rates may stimulate consumer spending, which brings growth to retail giants like Walmart; however, the Fed's monetary policy changes can alter the cost of loans and, subsequently, the state of the economy. Furthermore, Walmart's price-to-book (P/B) ratio changing from 3.5 to 3.96 from 2018 to 2019 indicates investors' increased trust and valuation, which may be caused by positive economic performance and market sentiment (macrotrends, 2019). Moreover, concerning the rise in ROA and ROE, we see that Walmart could leverage favorable market conditions such as consumers’ confidence and spending trends.

Analyze year-over-year performance from 2018 and 2019. Consider key metrics or ratios such as trailing PE ratio, forward PE ratio, price to book, return on assets, and return on equity in your conclusions

While comparing Walmart's performance from 2018 to 2019 regarding significant metrics and ratios shows considerable growth. As a result, the trailing P/E ratio fell by half from 52.26 to 21.89 between October 2018 and October 2019, indicating that investors began to pay less for each dollar of earnings, possibly due to better performance and market sentiment (Macrotrends, 2019). Likewise, the forward P/E ratio, which is an indicator of future earnings expectations, probably became more attractive, but the specific data for that ratio is not presented here. Moreover, the price-to-book (P/B) ratio increased from 3.5 in 2018 to 3.96 in 2019, which means a higher valuation relative to the company's book value, and this could imply investor confidence in Walmart's growth potential and asset quality. Not only that, the Return on assets (ROA) rose substantially to 8.25% from 2.45%, implying better use of the assets in generating profits. Additionally, in 2019, the Return on equity (ROE) improved from 12.53% in 2018 to 18.62%, signifying improved profitability concerning shareholders' equity (macrotrends, 2019). Overall, the advancement in the core factors and the ratios proves that Wal-Mart has a very good attribute in asset management, and to gain profits and also the confidence of the investors in changing economic situations. One of the critical performance factors of the company is business (efficiency, profitability, and growth) in 2019, which was better than that of the year before.

References

Dechezleprêtre, A., & Sato, M. (2017). The impacts of environmental regulations on competitiveness. Review of environmental economics and policy.

Macrotrends. (2019). Walmart Net Income 2010-2024 | WMT. Retrieved from https://www.macrotrends.net/stocks/charts/WMT/walmart/net-income

Macrotrends. (2019). Walmart ROE 2010-2024 | WMT. Retrieved from https://www.macrotrends.net/stocks/charts/WMT/walmart/roe