Please make the following corrections listed below to the attached paper.
The sections needed to be updated are highlighted in yellow on the attach paper.
Funding Choice
Include the numerical breakdown of the total amount of funding between the options. For self-funding, you will need to provide numerical justification that you have those funds. So, include the net income (under the Income Statement), the cash assets (under the Balance Sheet) and the end cash position (under the Cash Flow Statement) as of 01/31/2024. Include the advantages of self-funding and debt within this discussion as well (do not bring up equity). focus on what debt and self-funding bring to the table.
WACC
You need to update the figure and are not starting from scratch. Use an online WACC calculator such as Calkoo. For cost of equity, cost of debt and tax rate; do a websearch and use a site such as ValueInvesting, GuruFocus, Finbox, etc. For total equity and total debt, you can find these figures on Walmart’s Yahoo Finance page under the Financials tab and the blue Balance Sheet link. For total equity, click on the total equity gross minority arrow. This will open up STOCKHOLDERS EQUITY. Add 3 zeros to this figure and enter into your calculator as this is your total equity variable. For total debt, click on the total liabilities net minority arrow, the total noncurrent liabilities arrow, and the long term debt and capital lease arrow. This will open up LONG TERM DEBT. Add 3 zeros to this figure PLUS the debt amount from your project. This is your total debt variable. You should now have an updated WACC figure. Take a screenshot and paste it into your paper. For the discussion, format as follows: (1) Define WACC and what it measures. (2) State and cite ALL variables from your calculator including your new WACC figure. (3) Since you are partially self-funding, you need to include the statement that those funds are already included within that figure as part of the total equity variable. (4) Discuss what this figure implies for your firm – compare this figure to ROIC (do a websearch). If ROIC is higher than WACC (which it is for your firm), then this implies that your firm is making appropriate decisions and adding shareholder value. CITE your ROIC figure as well.
Income Statements.
Go to Walmart’s Yahoo Finance page. Click on the Financials tab and the blue Income Statement link. Copy the last full year (not the TTM column) to Excel. Only copy the first 10 or 11 rows up through Net Income Common Stockholders. Do NOT open arrows. Now, you will project those figures for the next three years (end dates will depend on your firm so I will just refer to these as base year and Years 1-3 for purposes of this hint). But, you will need to provide your dates on your income statements. Keep all figures as they were stated in Yahoo and add a statement that “all figures are posted in thousands”. Also, keep these as whole numbers, no “cents” as this will simplify the process for you.
- Confirm your formula from top to bottom: total rev – cost of rev = gross profit – op exp = op inc + net non op + other inc = pretax inc – taxes = net income.
- Start with Total Revenue. Go to your firm’s Yahoo Finance page. Click on the Analysis tab. Yahoo gives you the revenue estimates for CURRENT YEAR and NEXT YEAR. Use the HIGH estimates INCLUSIVE of the value your project brings to the table. For the 3rd year, Yahoo gives you the PER ANNUM GROWTH ESTIMATE FOR THE NEXT FIVE YEARS (bottom of the page). Simply multiply this % with the NEXT YEAR revenue estimate to calculate the total revenue figure for the 3rd year. Revenues are done.
- For all other NON-SUBTOTAL categories (cost of rev, op exp, net non op, other inc and taxes), simply take the % for your base year and apply that to the next 3 years.
- Take cost of rev/rev for the base year and apply that % to Years 1-3.
- Take op exp/gross profit for the base year and apply that % to Years 1-3
- Take net non op/op inc for base year and apply that % to Years 1-3
- Take other inc/op inc for base year and apply that % to Years 1-3
- Take taxes/pretax inc for base year and apply that % to Years 1-3
For the discussion, format as follows: (1) Yahoo high estimates were used for 2025 & 2026 with a ?% growth rate for 2027, inclusive of the value of the project. (2) For all other categories, 2024 historical %s were used as no material changes are expected at this time. (3) This results in a ?% increase in total revenue and a ?% increase in net income from 2024-2027. (4) Plug your project in a few sentences and close out the discussion.
