Corporate Finance Case Study: Wal-Mart Corporation

RESEARCH PAPER – CORPORATE FINANCE

Introduction

In 1962, the first Walmart store was opened in Rogers, AK. Founded on the principal, “The Lowest Prices Anytime, Anywhere,” offering better prices and services for his customers was the guiding mission of Walmart. By 1967, 24 stores were owned by the Walton’s. In 1970, Walmart was incorporated as Walmart Stores, Inc., and was first traded on the NYSE in 1972, trading at $16.50 per share. As of December 2014, Walmart shares are trading at $84.12, and Walmart has grown to the most profitable company in the world (Forbes), operating 11,000 stores in 27 countries with 2.2 million associates. Walmart is still owned largely by the Walton family (over 50% ownership), and in the course of this past year,

The Chairman of the board of directors is Ron Walton, son of Sam Walton. The chairmanship of the board has always been held by a family member. The current CEO Doug McMillon is a grandson in Law of Sam Walton though in previous year, this has been an independent person. There is an annual evaluation of the Board members to determine their independence. The Board members must also be nominated to various committees annually.51% of Walmart shares are owned by major holders including the current CEO and President Doug McMillon, Current Chairman Rod Walton and other insiders. The Corporate governance document of Walmart states that each director should have meaningful ownership interest in the organisation. It also states that within 5 years of joining the board, each new director is required to own a certain amount of shares.The Corporate governance document states that the board should have 7 to 16 directors who all must be nominated and elected by a majority vote. Outside directors are expected to serve for 5 years with a review and evaluation of their contribution at which time they will be asked to serve for another 5 years or be asked to leave. Walmart’s policy is to encourage managers to be frugal and save where possible, managers must control hours worked by employees to avoid overtime so as to stay within

All financial books, records, and accounts must accurately reflect financial transactions and events. They must conform to generally accepted accounting principles, and to Walmart’s system of internal controls. No Walmart document or record may be falsified for any reason. No undisclosed or unrecorded accounts of Walmart’s funds or assets may be established for any purpose.

Stockholder Analysis

Walmart stores Inc.’s gross profit margin improved from 2015 to 2017. Walmart stores Inc.’s operating profit margin deteriorated from 2015 through to 2017. Walmart stores Inc.’s net profit margin deteriorated from 2015 all through to 2017. The Return on equity deteriorated from 2015 through to 2017 and the return on assets deteriorated from 2015 through to 2017.

Below is a table with the profitability ratios from 2012 to