Wal-Mart Cash Flow

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A firm’s cash flow statements provides very useful data to help investors understand how a company’s operating activities produce cash for the firm. Perhaps more importantly, investors can use a cash flow statement to determine the possibility of a firm generating new cash flows, otherwise known as future cash flows. Two common ways to analyze a cash flow statements, and other financial statements, is to common size the financial statement and to use various financial ratios. Wal-Mart’s positive cash flow comes from the firms operating activities, with this segment being the only segment of the three; operating, investing, and financing, that has positive cash flow. It is crucial that Wal-Mart keeps the firms operating activities cash flows largely positive. With the negative cash flows from investing activities and financing activities, negative operating cash flows would be very detrimental to the firm and could mean the firms collapse. The positive cash flow the firm makes in operating activities is allocated and used in other areas, such as financing activities or investing activities. The positive cash flows from operating activities is mainly derived from income from continuing operations. Looking at Wal-Mart income statement, you see a line item called “Income from continuing operations”; this line is two lines up from “Consolidated net income”. Income from continuing operations is essential consolidated net income minus income or loss from discontinued operations. In Fiscal Year 2012, Wal-Mart had Income from continuing operations of $15,959,000,000. This large number is carried over from the Income Statement to the Cash flow statement and recorded as Income from continuing operations in the Cash Flow Statement. This number makes up the significant portion of total Net Cash provided by operating activities. However, the cash flow statements also make

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