Download
1 / 28
280 likes | 401 Vues
This module discusses critical aspects of adjusting enterprise operations, focusing on key financial areas. It examines Walmart’s inventory management practices with no adjustments needed between LIFO and FIFO methods. The analysis of operating leases reveals a downward trend in capitalized lease liabilities, while an exploration of special-purpose entities uncovers potential undisclosed arrangements. Additionally, the module highlights various share-based compensation awards, including restricted stock and stock options, emphasizing their impact on shareholders' equity. Insights into current tax strategies and regulatory changes are also included.
E N D
Agenda • Inventory method • Operating leases • Special-purpose entities • Share-based compensation
No Adjustment Needed • Walmart US utilizes LIFO • International utilizes FIFO • Sam’s Club weighted average • But inventory under LIFO ≈ FIFO for Walmart • No adjustment needed
No Adjustment Needed • Note 1: • At January 31, 2014 and January 31, 2013, the Company's inventories valued at LIFO approximate those inventories as if they were valued at FIFO.
Before Adjustment • Note 11: The Company has long-term leases for stores and equipment.
Results Why did capitalized operating lease go down? Total minimum payments go down? (2013 to 2014: $16,803 to $17,170) Discount rate go up?
Results Discount rate for lease going up year after year Reason? Is such a dramatic increase reasonable? Implication for future and projection? Firm discount rate implications?
No mention of SPEs • No hits for “special purpose entities” on 10-K • No mention of SPEs in “Off Balance Sheet Arrangements” section • Is there something not disclosed/missing?
Don’t have to pay taxes on dividends Can deduct from state income tax
Is it still relevant? • Now several state regulators are trying to crack down on the strategy, used largely by retailers and banks, and some other states have changed their laws to try to end the practice. Yesterday, New York Gov. Eliot Spitzer included elimination of the loopholeas part of his proposed budget, a fix he said would bring the state $83 million a year. – WSJ
Conclusion • Can’t conclude anything… • Financial reports don’t provide information • New information not reported by media • Personally unfamiliar with tax laws • Are there more arrangements?
Conclusion • Regardless, consolidation should make EPAT and NEA same after capitalization of leases • Only (?) effect is state taxes
Three Award Types • Restricted Stock and Performance Share Awards • Restricted Stock Rights • Stock Options
Three Award Types • Restricted Stock and Performance Share Awards • Restricted Stock Rights • Stock Options Gives employee stock Give employees right to buy stock
Three Award Types • Restricted Stock and Performance Share Awards • Restricted Stock Rights • Stock Options Fair value of stock expensed Fair value of option expensed
Only Adjust Stock Options • Since first two awards already expensed no liability needed
Results Price at 1/30/2009: $47.12 Weighted average exercise price: $49.11 Value of option = $0
Results Can’t grasp much intuition from results How to incorporate into projections?
