Income Statements – January 31, 2004 (All numbers in thousands) Wal-Mart Kmart S
ID: 2460527 • Letter: I
Question
Income Statements – January 31, 2004
(All numbers in thousands)
Wal-Mart Kmart Sears Target
Sales 258,681,000 23,253,000 41,124,000 48,163,000
Cost of Sales 198,747,000 17,846,000 26,231,000 31,790,000
Gross Profit 59,934,000 5,407,000 14,893,000 16,373,000
Administrative Expenses 44,909,000 4,998,000 9,111,000 11,534,000
EBIT 15,025,000 409,000 5,782,000 4,839,000
Interest 996,000 162,000 1,025,000 559,000
Taxes (@ 35 %) 4,910,150 86,450 1,664,950 1,498,000
Net Income 9,118,850 160,550 3,092,050 2,782,000
Balance Sheets as at January 31, 2004
(All numbers in thousands)
Wal-Mart Kmart Sears Target
Cash and cash equivalents 5,199,000 2,088,000 9,057,000 816,000
Receivables 1,254,000 301,000 3,397,000 5,776,000
Inventory 26,612,000 3,238,000 5,335,000 5,373,000
Total Current Assets 33,065,000 5,627,000 17,789,000 11,965,000
Property, Plant & Equip. 58,530,000 153,000 6,788,000 16,969,000
Other Assets 6,079,000 120,000 908,000 1,495,000
Total Assets 97,674,000 5,900,000 25,485,000 30,429,000
Accounts Payable 31,051,000 1,772,000 7,582,000 7,448,000
Other current Liabilities 6,367,000 1,050,000 5,194,000 866,000
Total current liabilities 37,418,000 2,822,000 12,776,000 8,314,000
Long term Debt 20,099,000 2,297,000 4,718,000 10,217,000
Common stock 431,000 208,000 823,000 96,000
Retained Earnings 39,726,000 573,000 7,168,000 11,802,000
Total Liabilities & Equity 97,674,000 5,900,000 25,485,000 30,429,000
Questions you should consider in reviewing the case:
1. Which firm is most liquid?
2. What is the return to shareholders?
3. What is the NPV of buying Sears?
4. What is the PV of Mr. Lacy’s pay package?
5. How could we find the greatest underperforming area for any of the firms?
Explanation / Answer
Income Statements – January 31, 2004 Wal-Mart Kmart Sears Target Sales 258,681,000 23,253,000 41,124,000 48,163,000 Cost of Sales 198,747,000 17,846,000 26,231,000 31,790,000 Gross_Profit 59,934,000 5,407,000 14,893,000 16,373,000 Administrative_Expenses 44,909,000 4,998,000 9,111,000 11,534,000 EBIT 15,025,000 409,000 5,782,000 4,839,000 Interest 996,000 162,000 1,025,000 559,000 Taxes (@ 35 %) 4,910,150 86,450 1,664,950 1,498,000 Net Income 9,118,850 160,550 3,092,050 2,782,000 Balance Sheets as at January 31, 2004 Wal-Mart Kmart Sears Target Cash_and_cash_equivalents 5,199,000 2,088,000 9,057,000 816,000 Receivables 1,254,000 301,000 3,397,000 5,776,000 Inventory 26,612,000 3,238,000 5,335,000 5,373,000 Total_Current_Assets 33,065,000 5,627,000 17,789,000 11,965,000 Property,_Plant_&_Equip. 58,530,000 153,000 6,788,000 16,969,000 Other_Assets 6,079,000 120,000 908,000 1,495,000 Total_Assets 97,674,000 5,900,000 25,485,000 30,429,000 Accounts_Payable 31,051,000 1,772,000 7,582,000 7,448,000 Other_current_Liabilities 6,367,000 1,050,000 5,194,000 866,000 Total_current_liabilities 37,418,000 2,822,000 12,776,000 8,314,000 Long_term_Debt 20,099,000 2,297,000 4,718,000 10,217,000 Common_stock 431,000 208,000 823,000 96,000 Retained_Earnings 39,726,000 573,000 7,168,000 11,802,000 Total_Liabilities_&_Equity 97,674,000 5,900,000 25,485,000 30,429,000 Current Ratio= Current Assets/Curret Liabilities 0.88 1.99 1.39 1.44 Quick Ratio=(Cash and Cash Equivalents + Receivalbles)/Current Liabilities 0.17 0.85 0.97 0.79 Sears is most liquid firm. Return to Shareholders (Per common stock holder) (net Income/Common Stock) 21.16 0.77 3.76 28.98