Walmart Tools for Decision-making

Walmart Tools for Decision-making

Income statement

The income statement is one of the reports that the managers use when making decisions at Walmart. The report shows the expenses and revenues that the company has incurred and gained. The sales for a particular period represent the gross revenue that Walmart has generated. The net income is then shown after deducting the Cost of Goods sold, expenses, and taxes. This is the company’s profit.

Conversely, this report provides annual or semi-annual data, which the managers use to determine whether the company has been profitable or not. Additionally, the data allows managers to compare the financial goals and assess their achievements. It further enables them to monitor the expenses in comparison to the profits.

Balance Sheet

The balance sheet shows Walmart’s assets, liabilities, and equity held by shareholders. The managers use this report to determine the company’s financial position. The main principle in this report is that assets are a sum of liabilities and shareholders’ equity. The managers can ascertain the amount of money that is liquid, the accounts receivables, assets, and inventory (Abdullah, 2021). This, when compared to liabilities, should show the company’s retained earnings. The managers can then determine whether to acquire more assets that would generate more revenue or increase the inventory.

The two reports are different because each provides additional data. Nevertheless, the income statement shows the company’s earnings, and this information can be compared to the balance sheet to ascertain the profits that Walmart is able to retain after paying dividends to shareholders, paying liabilities, and making investments (Abdullah, 2021). Therefore, the differences between both reports facilitate the comparison of data, which enables the managers to make efficient decisions. Thus, they are complementary reports.

Reference

Abdullah, C. (2021). The Efficiency Of Financial Ratios Analysis To Evaluate a Company’s Profitability. Journal of Global Economics and Business, 2(4), 119-132.

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Instructions
Reflect on your prior assignments and consider conducting internal and external research on common financial reports used by Walmart’s managers, e.g. store reports, financial statements, etc. Ask your manager(s) about two words they use when making decisions for the store.

In 250-275 words, write about the following:
1- Describe the reports you discussed with your manager

2- Explain the relationship between the reports and how the information in each is used to make decisions. NOTE: Keep in mind how internal and external factors play a role in performance