Acc 201 Case 1

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TOURO UNIVERSITY MIGUEL J. DOMINGUEZ ACC201 MODULE 1/CASE Dr. Amarjit Gill Company 1: Walmart Q1: How much cash is available to pay the companies current debt? Ans.: $6,416 million. Is the company in trouble or in good shape? Ans.: total current assets equals $43,824 million. Total current liabilities equals $48,826 million. The net difference between current assets and current liabilities is $5,002 million in favor of current liabilities. When looking at cash available to pay the company current debts, it is safe to say that Walmart is not in good shape. Q2: Is the company increasing or decreasing its investment in its operations? Ans2: Total asset minus total current assets equal non-current. Non-current assets 2006 = 138,187 – 43,824 = 94,363 million Non-current assets 2005 = 120,154 – 38,854 = 81,300 million Difference between non-current assets from 2006 to 2005:$13,063 million. Net used in investing activities 2006: ($14,183) million When comparing the $13,063 million to the ($14,183) million, it appears that there is an increase in Wal-Mart’s investments in its operations. Q3: How well is the company doing in its operations? Ans3: net income 2004, 2005, 2006 (in millions): 9054, 10267, 11231 Cash flow from operating activities for 2004, 2005, 2006 (in millions): 15996, 15044, 17633. Despite the drop in cash flow from operating activities in 2005, the overall difference when comparing the three years is 1637 million from 2004 to 2006. Considering this increase in cash flow from operating activities along with the increase of net income from 2004 through 2006, it is observed that Wal-Mart’s operations are doing well. Grading Wal-Mart: I would give Wal-Mart a C grade. I would feel better if they had their current assets higher then their current

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