FIN 419 Week 4 Team Assignment Working Capital Strategies Paper
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Week 4: Working Capital Strategies Paper – Wal-Mart
Working capital is the amount by which a firm’s current assets exceed its current liabilities. Herein, team A will review Walmart’s financial reports, such as balance sheets, statements of cash flow, management comments, and footnotes to financial statements, in order to explain how each current asset and liability account has affected cash management strategies. In addition, assuming that Walmart’s next year’s forecasted revenues increase by 20%, we will provide a detailed working capital recommendation to senior management based on next year’s increase in revenue along with assumptions made regarding other line items in the pro forma financial statements. Finally, we will discuss the effect of this revenue increase on Walmart’s working capital policy, identify lessons learned, and discuss areas for further development.
Working Capital Recommendation
To provide recommendations on Walmart’s working capital, the company’s current assets and liabilities must be evaluated. Moreover, the conversion of current assets into cash is necessary to meet current liability requirements (Gitman, 2005). According to their 2010 annual report, Walmart’s current assets included cash, receivables, inventories, prepaid expenses, and current assets of discontinued operations; totaled $48,331 billion (Walmart, 2010). However, current liabilities in the same period totaled $55,561 billion – leaving a deficit over $7 billion for the 2010 fiscal year.
FIN 419 Week 4 Team Assignment...