NATIONAL ECONOMICS UNIVRESITY

BUSSINESS SCHOOL

GROUP ASSIGNMENT
COURSE: FINANCIAL ACCOUNTING

Topic:
FINANCIAL ACCOUNTING &
FINANCIAL STATEMENT ANALYSIS

Lecturer : Dr. Tran Thi Minh Huong

Class : EMBA 20A
Group :6
Members : Nguyen Ha Minh EMBA20023
Le Phuong Linh EMBA20021
Ngo Phuong Linh EMBA20036

Ha Noi – 06/2022
 CONTENTS
I. INTRODUCTION ------------------------------------------------------------------------------------- 1
II. ABOUT THE COMPANY -------------------------------------------------------------------------- 2
III. LIQUIDITY RATIOS ------------------------------------------------------------------------------ 3
1. Current Ratio ------------------------------------------------------------------------------------------ 3
2. Quick Ratio ------------------------------------------------------------------------------------------- 3
3. Current Cash Debt Coverage ----------------------------------------------------------------------- 4
4 & 5. Receivables turnover & Average collection period ---------------------------------------- 4
6 & 7. Inventory turnover & Average days in inventory ------------------------------------------ 5
IV. SOLVENCY RATIOS ------------------------------------------------------------------------------ 7
8. Debt to Total Assets Ratio -------------------------------------------------------------------------- 7
9. Times Interest Earned ------------------------------------------------------------------------------- 7
10. Cash Debt Coverage -------------------------------------------------------------------------------- 8
11. Free Cash Flow-------------------------------------------------------------------------------------- 8
V. PROFITABILITY RATIOS -----------------------------------------------------------------------10
12. Return On Ordinary Shareholders’ Equity ---------------------------------------------------- 10
13. Return on Assets ---------------------------------------------------------------------------------- 10
14. Profit Margin -------------------------------------------------------------------------------------- 11
15. Asset Turnover ------------------------------------------------------------------------------------ 12
16. Gross Profit Rate ---------------------------------------------------------------------------------- 12
17. Operating Expenses To Sales Ratio ------------------------------------------------------------ 12
18. Cash Return On Sales Ratio --------------------------------------------------------------------- 13
19. Earnings Per Share (EPS) ----------------------------------------------------------------------- 13
20. Price-earnings Ratio ------------------------------------------------------------------------------ 14
21. Dividend Payout Rate ---------------------------------------------------------------------------- 14
VI. RECOMMENDATIONS --------------------------------------------------------------------------16
1. Liquidity --------------------------------------------------------------------------------------------- 17
2. Solvency --------------------------------------------------------------------------------------------- 18
3. Profitability------------------------------------------------------------------------------------------ 18
VII. LIMITATIONS ------------------------------------------------------------------------------------20
VIII. SUMMARY ----------------------------------------------------------------------------------------21
REFERENCE --------------------------------------------------------------------------------------------22
 I. INTRODUCTION

Financial statements can tell us many things about enterprises. One very common way
to make sense of the information in financial statements is ratio analysis. Ratio analysis can
help us gain an understanding of how the company is doing, compared to its competitors and
the whole industry. In this report, we aim to conduct a ratio analysis for Walmart, the biggest
retail company in the world.
In chapter II, we will give a brief overview of Walmart and its scale of operations. We
also compare Walmart to 2 competitors in the same industry: The Home Depot and Target. The
3 companies are all retailers, but different in size.
In the following 3 chapters, we will look at 21 financial ratios for Walmart. The ratios
are divided into 3 main groups: Liquidity, Solvency and Profitability ratios. We will do a brief
analysis of each of the ratios, comparing it with the past performance of the competitors. We
used the annual reports of the last 3 years (2019-2021) from Walmart, and the 2021 annual
reports from Home Depot and Target. Some ratios were benchmarked against industry averages
or the generally accepted range.
In chapter VI, we will give a judgement of how well Walmart is doing for each of the
21 ratios. For the ratios that are not good, we will provide some recommendations on how to
improve them.
We will end the report with the limitations and conclusions.

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 II. ABOUT THE COMPANY

Walmart is the biggest retailer in the world, with worldwide sales of $543 billion in
2020. (National Retail Federation, 2021). Walmart was established in 1945 in Arkansas by Sam
M. Walton. Their headquarters are still in Arkansas. Currently, it is serving 240 million
customers with 11,400 stores and websites under 54 banners, across 26 countries.
Walmart maintains a price-leadership position in the industry. “Everyday at Low
Prices” (EDLP) is their business strategy.
The company is being traded on the New York Stock Exchange under the symbol
“WMT”.
In this report, we will compare Walmart with 2 direct competitors: The Home Depot
and Target. These 2 supermarket chains are also in the top 10 largest retailers in the US. Below
is an overview of the scale of the 3 companies:

Walmart The Home Depot Target

2020 Worldwide Retail sales

$543.17 $129.89 $92.40
(US$ billions)

# Rank on top largest retailers

1 4 7
(By sales)

Year of Establishment 1945 1902

Number of stores worldwide 11,400 2,317 1,926

Number of Countries 26 3 1

Building materials,
Products Supermarket home, garden & Supermarket
repair products

Total worldwide workforce 2.3 million 490,600 450,000

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 III. LIQUIDITY RATIOS

1. Current Ratio

Home
Walmart Target
Depot
Formula Ratio Benchmark
2021 2020 2019 2021 2021

Current Assets $81,070 $90,067 $61,806 $29,055 $21,573

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 Current Liabilities $87,379 $92,645 $77,790 $28,693 $21,747

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 >1.25:1
Current Ratio 0.93:1 0.97:1 0.79:1 1.01:1 0.99:1 (generally
accepted)

Walmart’s Current Ratio is generally on an upward trend. It increased significantly from

0.79:1 in 2019 to 0.97:1 in 2020 (when There was a huge increase in Current Assets), then
decreased slightly to 0.93:1 in 2021. Based on this ratio, Walmart does not have sufficient
current assets to meet liabilities. The ratio is well below the generally acceptable number of
1.25:1 (Ready Ratios, 2022).
The 2 competitors have slightly higher Current Ratios (1.01:1 - Home Depot, 0.99:1 -
Target). This might suggest that having a low Current Ratio is acceptable in the retail industry.
Walmart should try to increase this ratio, to signal to investors it has the ability to pay current
debts.

2. Quick Ratio

Home
Walmart Target
Depot
Formula Ratio Benchmark
2021 2020 2019 2021 2021

Cash And Cash

$14,760 $17,741 $9,465 $2,343 $5,911
Equivalents

Marketable
0 0 0 0 0
Securities
𝐶𝑎𝑠ℎ +
𝑀𝑎𝑟𝑘𝑒𝑡𝑎𝑏𝑙𝑒
Net Receivables $8,280 $6,516 $6,284 $3,426 $835
𝑠𝑒𝑐𝑢𝑟𝑖𝑡𝑖𝑒𝑠 +
𝑁𝑒𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠 Current Liabilities $87,379 $92,645 $77,790 $28,693 $21,747
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
0.15:1 to
0.33:1
Quick Ratio 0.26:1 0.26:1 0.20:1 0.20:1 0.31:1
(retail
industry)

Similarly, Walmart’s Quick Ratio (Acid Test) is on an upward trend, from 0.20:1 in
2019 to 0.26:1 in 2020 and 2021. The Quick Ratio is a more stringent liquidity test than the
Current Ratio. Walmart’s Quick Ratio suggests that it only has the immediate liquidity to pay
for 26% of current liabilities.

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 The competitors also have very low Quick Ratios (0.20:1 - Home Depot, 0.31:1 -
Target). A low Quick Ratio is considered acceptable in the Retail industry, as the companies
have cash coming in every day to be used to pay debts when necessary.

3. Current Cash Debt Coverage

Home
Walmart Target
Depot
Formula Ratio Benchmark
2021 2020 2019 2021 2021

Net Cash
Provided by
$24,181 $36,074 $25,255 $16,571 $8,625
Operating
Activities

Beginning
Current $92,645 $77,790 $77,477 $23,166 $20,125
𝑁𝑒𝑡 𝑐𝑎𝑠ℎ Liabilities
𝑝𝑟𝑜𝑣𝑖𝑑𝑒𝑑 𝑏𝑦
𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑎𝑐𝑡𝑖𝑣𝑖𝑡𝑖𝑒𝑠 Ending Current
$87,379 $92,645 $77,790 $28,693 $21,747
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 Liabilities
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Average
Current $90,012 $85,218 $77,634 $25,930 $20,936
Liabilities

>0.40:1
Current Cash
0.27:1 0.42:1 0.33:1 0.64:1 0.41:1 (generally
Debt Coverage
accepted)

Walmart’s Current Cash Debt Coverage (CCDC) is fluctuating wildly over the past 3
years, increasing from 0.33:1 in 2019 to 0.42:1 in 2020, then decreasing to 0.27:1 in 2021. This
was mainly due to a sharp decline in Net Cash Provided by Operating Activities in 2021
compared to 2020. This means Walmart’s ability to generate cash to meet its short-term
obligations is deteriorating. Walmart’s CCDC of 0.27:1 is alarmingly lower than the generally
accepted ratio of 0.40:1.
The competitors’ CCDC is much better than Walmart’s (0.61 - Home Depot, 0.41:1 -
Target). Walmart must improve its CCDC, or else it could face serious questions from investors.

4 & 5. Receivables turnover & Average collection period

Walmart’s Receivables turnover increased from 82.7 times in 2019 to 86.8 times in
2020, then decreased to 76.7 times in 2021. This means Walmart was able to collect receivables
76.7 times in one year.
Walmart’s Average Collection Period decreased slightly from 4.41 days in 2019 to 4.21
in 2020, then increased sharply to 4.76 days in 2021), meaning it takes Walmart 4.76 days on
average to collect their credit sales from customers.
There could be many reasons for this increase from 2020 to 2021. For example (1)
Customers are demanding longer periods before payment, and (2) Walmart is relaxing its
receivable collection policies, to become more competitive.

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 The other 2 competitors have very differing Receivables Turnover (47.1 times - Home
Depot, 142.7 times - Target) and Average Collection Period (7.75 days - Home Depot, 2.56
days - Target). These varying numbers between the 3 competitors may be due to their varying
business strategies. Target has the highest Receivables Turnover, maybe its credit collection
Unit is doing its job very well. Home Depot has the highest Average Collection Period, which
might be one contributing factor to explain why it has the highest profit margin, as many
customers would prefer a longer grace period. Walmart can choose either direction, depending
on its business strategy.

Home
Walmart Target
Ratio Depot
Formula
2021 2020 2019 2021 2021

Net Credit Sales

$567,762 $555,233 $519,926 $151,157 $104,611
(*Using Net Sales)

Beginning Receivables $6,516 $6,284 $6,283 $2,992 $631

Ending Receivables $8,280 $6,516 $6,284 $3,426 $835

Average Net Trade

$7,398 $6,400 $6,284 $3,209 $733
Receivables

𝑁𝑒𝑡 𝑐𝑟𝑒𝑑𝑖𝑡 𝑠𝑎𝑙𝑒𝑠

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑒𝑡 Receivables Turnover
76.7 86.8 82.7 47.1 142.7
𝑡𝑟𝑎𝑑𝑒 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠 times times times times times

365 𝑑𝑎𝑦𝑠 Average Collection 4.76 4.21 4.41 7.75 2.56

𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 Period days days days days days

6 & 7. Inventory turnover & Average days in inventory

Walmart’s Inventory Turnover increased from 8.9 times in 2019 to 9.4 times in 2020,
then decreased to 8.46 times in 2021. This means Walmart was able to sell its average inventory
worth 8.46 times in 2021. Walmart’s ratio is higher than its competitors (5.19 times - Home
Depot, 6.11 times - Target), meaning it is better at moving inventory. However, its ratio is still
below the industry’s average of 10.86 times (Tarver & Munichiello, 2021).
Walmart’s Average Days in Inventory (ADI) decreased from 41.0 days in 2019 to 38.8
days in 2020, then increased to 43.2 days in 2021, meaning Walmart’s merchandise spend 43.2
days on average in their warehouse, before being purchased by customers. Walmart’s
worsening ADI means it is taking longer to sell its inventories compared to 2020.
However, Walmart’s ADI is still significantly smaller than those of competitors (70.4 -
Home Depot, 59.8 - Target), meaning Walmart is faster at turning inventories into sales. Its
ADI is also within the generally accepted range of 30 to 60 days (Hayes, 2022). Walmart should
keep this up.

5
 Home
Walmart Target
Depot
Formula Ratio Benchmark
2021 2020 2019 2021 2021

Cost Of
$429,000 $420,315 $394,605 $100,325 $74,963
Sales

Beginning
$44,949 $44,435 $44,269 $16,627 $10,653
Inventory

Ending
$56,511 $44,949 $44,435 $22,068 $13,902
Inventory

Average
$50,730 $44,692 $44,352 $19,348 $12,278
Inventory

>10.86
𝐶𝑜𝑠𝑡 𝑜𝑓 𝑠𝑎𝑙𝑒𝑠 Inventory 8.46 9.40 8.90 5.19 6.11 times
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 Turnover times times times times times (Industry
Average)

30 to 60
365 𝑑𝑎𝑦𝑠 Average
43.2 38.8 41.0 59.8 days
Days In 70.4 days
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 days days days days (generally
Inventory
accepted)

6
 IV. SOLVENCY RATIOS
8. Debt to Total Assets Ratio

Home
Walmart Target
Depot
Formula Ratio Benchmark
2021 2020 2019 2021 2021

Total Liabilities $152,969 $164,965 $154,943 $73,572 $40,984

𝑇𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 Total Assets $244,860 $252,496 $236,495 $71,876 $53,811

𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 0.64:1
Debt To Assets
0.62:1 0.65:1 0.66:1 1.02:1 0.76:1 (Industry
Ratio
Average)

Walmart’s Debt to Total Assets Ratio (DTAR) is on a decreasing trend, from 0.66:1 in
2019 to 0.62:1 in 2021. This might be a good signal to investors, as DTAR represents the
percentage of total assets that were financed by creditors. For every dollar of assets in 2021,
only 62 cents came from creditors. This ratio is about the same as the industry average of 0.64:1
(Ready Ratios, 2022).
Walmart’s DTAR is significantly better than the 2 competitors (1.02:1 - Home Depot,
and 0.76:1 - Target). Home Depot even have a DTAR of more than 1, meaning it is borrowing
more than what it has in assets, which is alarming. This means Walmart is not using as much
leverage as the 2 competitors.

9. Times Interest Earned

Home
Walmart Target
Depot
Formula Ratio Benchmark
2021 2020 2019 2021 2021

Profit
Before $18,696 $20,564 $20,116 $21,737 $8,907
Income Tax
𝑃𝑟𝑜𝑓𝑖𝑡 𝑏𝑒𝑓𝑜𝑟𝑒
𝑖𝑛𝑐𝑜𝑚𝑒 𝑡𝑎𝑥 + Interest
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑑 $1,994 $2,315 $2,599 $1,347 $421
Expensed
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒
Times 3 to 4 times
10.4 9.8 8.7 17.1 22.2
Interest (generally
times times times times times
Earned accepted)

Walmart’s Times Interest Earned (TIE) has been improving steadily, from 8.7 times in
2019 to 10.4 times in 2021. This means Walmart’s ability to generate profit to fulfil interest
payments is improving. The biggest reason for Walmart’s improving TIE could be the
company’s declining long-term debt (from $43,714 m in 2019 to $34,864 m in 2021), resulting
in lowering interest expenses.
Walmart’s competitors have even better TIE (17.1 times - Home Depot and 22.2 times
- Target). Nevertheless, Walmart’s TIE is still well above the general rule-of-thumb range of 3

7
to 4 times. Walmart is doing well at this ratio and there should not be any concerns regarding
TIE.

10. Cash Debt Coverage

Home
Walmart Target
Depot
Formula Ratio Benchmark
2021 2020 2019 2021 2021

Net Cash Provided

By Operating $24,181 $36,074 $25,255 $16,571 $8,625
Activities

Beginning Total
$164,965 $154,943 $139,661 $67,282 $36,808
𝑁𝑒𝑡 𝑐𝑎𝑠ℎ Liabilities
𝑝𝑟𝑜𝑣𝑖𝑑𝑒𝑑 𝑏𝑦
𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 Ending Total
$152,969 $164,965 $154,943 $73,572 $40,984
𝑎𝑐𝑡𝑖𝑣𝑖𝑡𝑖𝑒𝑠 Liabilities
𝐴𝑣𝑒𝑟𝑎𝑔𝑒
𝑡𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑒𝑠 Average Total
$158,967 $159,954 $147,302 $70,427 $38,896
Liabilities

>0.20 times
Cash Debt
0.15:1 0.22:1 0.17:1 0.24:1 0.22:1 (generally
Coverage
accepted)

Walmart’s Cash Debt Coverage (CDC) is on a declining trend, increasing from 0.17:1
in 2019 to 0.22:1 in 2020, then decreased to 0.15:1 in 2021. That means Walmart’s ability to
generate cash from operations to cover its liability is worsening. This is due to both the decline
in net cash provided by operating activities and the increase in Average Total Liabilities.
Walmart’s CDC is lower than its competitors (0.24:1 - Home Depot and 0.22:1 - Target)
and below the general rule-of-thumb level of 0.20. This should be a cause for concern for
Walmart. A further investigation into Walmart’s solvency is necessary.

11. Free Cash Flow

Home
Walmart Target
Depot
Formula Ratio
2021 2020 2019 2021 2021

Net Cash Provided By

$24,181 $36,074 $25,255 $16,571 $8,625
Operating Activities
Net cash provided by
operating – Capital
Capital Expenditures $13,106 $10,264 $10,705 $2,566 $3,544
expenditures
Free Cash Flow $11,075 $25,810 $14,550 $14,005 $5,081

Walmart’s Free Cash Flow (FCF) has been positive over the past 3 years, meaning
Walmart has been able to generate excess cash after investing in property and equipment, in
order to maintain operations, which is a good sign. However, its FCF is fluctuating over the

8
past few years. It decreased sharply from 2020 to 2021, due to a decrease in net cash provided
by operating activities, and higher capital expenditure.
Walmart’s FCF is lower than that of Home Depot but higher than that of Target.

9
 V. PROFITABILITY RATIOS
12. Return On Ordinary Shareholders’ Equity

Home
Walmart Target
Depot
Formula Ratio Benchmark
2021 2020 2019 2021 2021

Profit
Available to
Ordinary $13,940 $13,706 $15,201 $16,433 $6,946
Shareholders
(Net Income)

Beginning
𝑃𝑟𝑜𝑓𝑖𝑡 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 $80,925 $74,669 $72,496 $3,299 $14,440
Equity
𝑡𝑜 𝑜𝑟𝑑𝑖𝑛𝑎𝑟𝑦
𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 Ending Equity $83,253 $80,925 $74,669 $(1,696) $12,827
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑜𝑟𝑑𝑖𝑛𝑎𝑟𝑦
𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟 ′ 𝑠 Average
𝑒𝑞𝑢𝑖𝑡𝑦 Ordinary
$82,089 $77,797 $73,582.5 $2,497.5 $13,633.5
Shareholders’
Equity

Return On
27.9 cents
Ordinary 17 18 6.58
21 cents 51 cents (industry
Shareholders’ cents cents dollars
average)
Equity

Walmart’s Return on ordinary shareholders’ Equity (ROE) decreased from 21 cents in

2019 to 17 cents in 2021, due to the decrease in Net Income (from $15,201 in 2019 to $13,706
in 2020) and the increase in average ordinary shareholders’ equity (from $73,582.5 in 2019 to
$77,797 in 2020). 1 dollar invested yielded 17 cents in 2021. Despite the impact of COVID-19,
Walmart was still able to churn out positive ROEs in 2020 and 2021. However, this is much
lower than the industry average of 27.9 cents (Ready Ratios, 2022). The decreasing trend is also
worth investigating further.
Walmart’s ROE is significantly lower than its competitors (Home Depot - 6.58 dollars;
Target - 51 cents), meaning that Walmart’s ability to generate profit per dollar invested by the
owners is lower than its competitors. Home Depot’s ROE of 6.58 dollars is surely an outlier
and should not be used for comparison.

13. Return on Assets

Walmart’s Return on Assets (ROA) remains the same from 2020 to 2021. There was a
sharp decline from 6.7% in 2019 down to 5.6% in 2020, due to both the decrease in Net Income
(from $15,210 m in 2019 to $13,706 m in 2020) and the increase in average total assets (from
$227,895 m in 2019 to $244,496 m in 2020). Walmart’s ROA is also lower than the industry
average of 7.7 cents (Ready Ratios, 2022).
Walmart’s ROA is significantly lower than its competitors (23.1% - Home Depot,
13.2% - Target). In 2021, Home Depot generated almost more net income than Walmart,
despite having an Average Total Assets of only a third of Walmart’s. It is clear that Walmart is

10
not using their assets to generate income as efficiently as their competitors do. Walmart’s
managers should think of how to increase ROA. The next 2 ratios will shed light on how to
increase ROA.

Home
Walmart Target
Depot
Formula Ratio Benchmark
2021 2020 2019 2021 2021

Net Profit $13,940 $13,706 $15,201 $16,433 $6,946

Average
𝑃𝑟𝑜𝑓𝑖𝑡 $248,678 $244,496 $227,895 $71,228.5 $52,529.5
Total Assets
𝐴𝑣𝑒𝑟𝑎𝑔𝑒
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 7.7 cents
Return on
5.6 cents 5.6 cents 6.7 cents 23.1 cents 13.2 cents (industry
assets
average)

14. Profit Margin

Home
Walmart Target
Depot
Formula Ratio Benchmark
2021 2020 2019 2021 2021

Net Profit $13,940 $13,706 $15,201 $16,433 $6,946

𝑃𝑟𝑜𝑓𝑖𝑡 Net Sales $567,762 $555,233 $519,926 $151,157 $104,611

𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 4.8 cents
Profit
2.5 cents 2.5 cents 2.9 cents 10.9 cents 6.6 cents (industry
margin
average)

Walmart’s profit margin in 2021 is only 2.5 cents. This means that the company
generated 2.5 cents of profit for every dollar of sales. This thin margin is appropriate for
Walmart’s high-volume retail industry. It is also consistent with Walmart’s strategy to compete
by price. Their philosophy is “Everyday Low Cost”. However, it is worth noting that Walmart’s
profit margin decreased slightly from 2.9 cents in 2019 down to 2.5 cents in 2021, although net
sales increased in the same time period (from $519,926 m to $567,762 m), while COGS
decreased slightly (75.9% of net sales in 2019 and 75.6% of net sales in 2021). That means
profit margin decreased, although Net sales increased, and COGS decreased. The reason could
be that Walmart recorded a $2,410 m loss on extinguishment of debt in 2021. Therefore, the
fall in profit margin is not due to worsening operations.
Walmart’s profit margin in 2021 is lower than its competitors (Home Depot: 10.9 cents;
Target: 6.6 cents) and the industry average of 4.8 cents (Ready Ratios, 2022), meaning
Walmart’s ability to generate profit per dollar of sales is lower than its competitors. This could
be mainly due to having the cost of sales among the 3 companies (Walmart: 75.6% of Net Sales
in 2021; Home Depot: 66.4%; Target: 71.7%).

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 Having too small a profit margin is dangerous, as it could turn into losses quickly if the
company is not careful. In order to increase its profit margin, Walmart should try to lower its
cost of sales.

15. Asset Turnover

Walmart Home Depot Target

Formula Ratio
2021 2020 2019 2021 2021

Net Sales $567,762 $555,233 $519,926 $151,157 $104,611

𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 Average Total Assets $248,678 $244,496 $227,895 $71,228.5 $52,529.5
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
Asset turnover $2.28 $2.27 $2.28 $2.12 $1.99

Walmart’s Asset Turnover remains mostly unchanged at 2.28 from 2019 to 2021. This
means that for every dollar of Total Assets, the company has been able to consistently generate
$2.28 of sales over the past 3 years.
Walmart’s Asset Turnover is better than their 2 competitors (2.12 - Home Depot, 1.99
- Target). Walmart is slightly better than its competitors at turning assets into sales.

16. Gross Profit Rate

Home
Walmart Target
Depot
Formula Ratio Benchmark
2021 2020 2019 2021 2021

Gross profit $138,762 $134,918 $125,321 $50,832 $29,648

𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡
Net sales $567,762 $555,233 $519,926 $151,157 $104,611
𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
Gross profit rate 24.4% 24.3% 24.1% 33.6% 28.3% 31.6%

The Gross Profit Rate of Walmart increases slightly from 24.1% in 2019 to 24.4% in
2021, meaning Walmart has been able to maintain a stable level of COGS compared to Net
Sales. However, this rate is lower than their competitors (33.6% - Home Depot, 28.3% -
Target), and lower than the industry average of 31.6% (Ready Ratios, 2022). Walmart should
try to lower their COGS in order to increase Gross Profit Rate.

17. Operating Expenses To Sales Ratio

Walmart’s Operating expenses to sales ratio has been stable around 0.21:1 in the past 3
years. It is almost comparable to competitors (0.18:1 - Home Depot, 0.21:1 - Target). Walmart
has been able to control Operating expenses quite well, and should continue to do so.

12
 Home
Walmart Target
Depot
Formula Ratio
2021 2020 2019 2021 2021

Operating expenses $117,812 $116,288 $108,791 $27,792 $22,096

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔
Net sales $567,762 $555,233 $519,926 $151,157 $104,611
𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠
𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 Operating expenses to sales
0.21:1 0.21:1 0.21:1 0.18:1 0.21:1
ratio

Walmart’s Operating expenses to sales ratio has been stable around 0.21:1 in the past 3 years.
It is almost comparable to competitors (0.18:1 - Home Depot, 0.21:1 - Target). Walmart has
been able to control Operating expenses quite well, and should continue to do so.

18. Cash Return On Sales Ratio

Home
Walmart Target
Depot
Formula Ratio
2021 2020 2019 2021 2021

Net cash provided by

𝑁𝑒𝑡 𝑐𝑎𝑠ℎ $24,181 $36,074 $25,255 $16,571 $8,625
operating activities
𝑝𝑟𝑜𝑣𝑖𝑑𝑒𝑑 𝑏𝑦
𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑎𝑐𝑡𝑖𝑣𝑖𝑡𝑖𝑒𝑠 Net sales $567,762 $555,233 $519,926 $151,157 $104,611
𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
Cash return on sales ratio 0.043:1 0.065:1 0.049:1 0.110:1 0.082:1

Walmart’s Cash Return on Sales ratio (CROSR) has been unstable over the past 3 years,
increased slightly from 0.049 in 2019 to 0.065 in 2020, and then decreased to 0.043 in 2021.
This means the company can only generate 4.3 cents of net cash for every dollar of sale. This
is a very low ratio compared to its competitors (Home Depot - 0.11; Target - 0.082). Walmart
should try to improve CROSR by collecting more cash from sales.

19. Earnings Per Share (EPS)

Home
Walmart Target
Depot
Formula Ratio
2021 2020 2019 2021 2021

𝑃𝑟𝑜𝑓𝑖𝑡 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 Profit available to ordinary

$13,673 $13,510 $14,881 $16,433 $6,946
shareholders
𝑡𝑜 𝑜𝑟𝑑𝑖𝑛𝑎𝑟𝑦
𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 Weighted- average number
𝑊𝑒𝑖𝑔ℎ𝑡𝑒𝑑 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 2,792 2,831 2,850 1,054 488.1
ordinary shares
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑟𝑑𝑖𝑛𝑎𝑟𝑦
𝑠ℎ𝑎𝑟𝑒𝑠 Basic Earnings per share $4.90 $4.77 $5.22 $15.59 $14.23

13
 Walmart’s Basic Earnings Per Share (Basic EPS) decreased from $5.22 in 2019 to $4.77
in 2020, and then increased to $4.90 in 2021. The decreasing EPS might be due to the general
reduction in profit. Walmart’s EPS is lower than that of Home Depot and Target. However, the
comparison of EPS between different companies without share prices is not valid. Price-
earnings Ratio will be a better comparison.

20. Price-earnings Ratio

Home
Walmart Target
Depot
Formula Ratio
2021 2020 2019 2021 2021

Share price on 31
$139.81 $140.49 $114.49 $366.98 $220.43
Jan 2022
𝑆ℎ𝑎𝑟𝑒 𝑝𝑟𝑖𝑐𝑒
𝐸𝑎𝑟𝑛𝑖𝑛𝑔 Basic EPS $4.9 $4.77 $5.22 $15.59 $14.23
𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
28.53 29.45 21.93 23.54 15.49
Price-earnings Ratio
times times times times times

Walmart’s Price-Earnings Ratio (P-E Ratio) is on a general upward trend. It increased

from 21.93 times in 2019 to 29.45 times in 2020 and then decreased slightly to 28.53 times in
2021. This was mainly due to the strong increase in the share price over the last 3 years.
Walmart’s P-E Ratio is much larger than Home Depot - 23.54 times and Target - 15.49
times. This means that investors are valuing Walmart’s share more than its competitors.
Walmart’s investors are willing to pay more in the market for each dollar of earnings on its
shares, compared to that of Home Depot and Target.

21. Dividend Payout Rate

Walmart Home Depot Target

Formula Ratio Benchmark
2021 2020 2019 2021 2021

Dividends $6,152 $6,116 $6,048 $6,985 $1,548

𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠 Profit $13,940 $13,706 $15,201 $16,433 $6,946

𝑃𝑟𝑜𝑓𝑖𝑡
Dividend payout
44% 45% 40% 43% 22% 23%
rate

Walmart’s Dividend Payout Rate (DPR) has been generally increasing, from 40% in
2019 to 44% in 2021. This means Walmart has been consistently paying almost half of its
profits to its shareholders as dividends. Walmart’s DPR is higher than the 2 competitors (43%
- Home Depot, 22% - Target), and significantly higher than the industry average of 23%.
Dividend declared per common share has also been steadily increasing, from $2.12 in 2019, to
$2.16 in 2020, and $2.20 in 2021.
This high DPR is a double-edged sword. Paying high dividends might attract investors,
but it also means Walmart will have less money left to invest back in the company. Lowering

14
dividends might also affect share price. Walmart’s management should consider its business
strategy carefully, whether to maintain this high ratio.

15
 VI. RECOMMENDATIONS
Below is a summary of all 21 ratios analysed in this report for Walmart in 2021. We
also made judgements on how good each ratio is, compared to the 2 competitors and industry
averages. We will then make recommendations on how to improve the ratios that are not up to
standard.

In the danger range. There is cause for further

Very Poor:
investigation
Slightly worse than the 2 competitors or industry
Poor:
average.
In the same range, comparable to the 2
Average:
competitors or industry average.
Slightly better than the 2 competitors or industry
Good:
average.
Significantly better than the 2 competitors or
Excellent:
industry average.

Ratio Very poor Poor Average Good Excellent

Liquidity Ratios

Current Ratio ✔

Quick Ratio ✔

Current Cash Debt Coverage ✔

Receivables turnover ✔

Average collection period ✔

Inventory turnover ✔

Average days in inventory ✔

Solvency Ratios

Debt to Total Assets Ratio ✔

Times Interest Earned ✔

Cash Debt Coverage ✔

Free Cash Flow ✔

Profitability Ratios

Return On Ordinary ✔
Shareholders’ Equity

16
 Ratio Very poor Poor Average Good Excellent

Return on Assets ✔

Profit Margin ✔

Asset Turnover ✔

Gross Profit Rate ✔

Operating Expenses To Sales ✔

Ratio

Cash Return On Sales Ratio ✔

Price-earnings Ratio ✔

Dividend Payout Rate ✔

1. Liquidity
In general, Walmart is not doing too well in terms of liquidity. Its short-term ability to
fulfil short-term debts is average at best. There is a lot of room for improvement. Out of the 7
ratios analysed, 5 are on par with competitors or industry average (Quick Ratio, Receivables
turnover, Average collection period, Inventory turnover, Average days in inventory). 2 ratios
are not up to the standard. Walmart should focus on increasing its Current Ratio and Current
Cash Debt Coverage.
To raise its Current Ratio, Walmart should try to either increase Current Assets,
decrease Current Liabilities, or both. Current Assets can be increased by holding more cash and
cash equivalents, or Inventories. (These 2 items account for 70% and 18% of Current Assets in
2021 respectively). However, having too much cash is not a good thing, as cash could be
invested elsewhere. Holding too much inventory is also not a good idea, as there will be more
expenses (storage, wear and tear, perishable goods…) Current Liabilities can be reduced by
lowering Accounts Payable (63% of Current Liabilities in 2021). Maybe Walmart should pay
its suppliers earlier. However, the cash could be used to invest elsewhere.
Walmart’s Current Cash Debt Coverage (CCDC) in 2021 is very low. To increase
CCDC, Walmart can either generate more Cash from Operations or reduce Current Liabilities.
Net Cash Provided by Operating Activities can be increased by collecting more Account
Receivables. However, this might reduce Walmart’s competitiveness, as customers might
switch to another supermarket which allows a more relaxed payment policy. Current Liabilities
can be reduced by paying suppliers. However, the cash could be used for investment elsewhere.
By improving liquidity ratios, Walmart can signal to investors that it can meet short-
term obligations and even unexpected needs for cash.

17
2. Solvency
Similar to its liquidity, Walmart’s solvency is only average. Out of the 4 ratios analysed,
2 ratios are on par with competitors or industry averages (Debt to Total Assets Ratio, Free Cash
Flow). Times Interest Earned is excellent and should be maintained. Walmart should focus its
efforts to improve Cash Debt Coverage (CDC), as it is lower than its competitors and the
benchmark.
To raise CDC, Walmart could either improve Net Cash Provided By Operating
Activities or reduce Average Total Liabilities. To increase Net Cash Provided By Operating
Activities, Walmart can try to turn Account Receivables into cash by collecting more
aggressively. However, this might turn some customers away to competitors. To decrease
Average Total Liabilities, Walmart should try to reduce Accounts Payable and Long-Term Debt
(accounting for 36.1% and 22.8% of Total Liabilities in 2021 respectively). However, by paying
these debts, Walmart will have less cash, which could be invested elsewhere.
Improving solvency ratios will help to signal to investors that Walmart has the ability
to pay long-term debts and survive over a long time.

3. Profitability
Walmart’s profitability is only marginal. This is consistent with its long-standing motto:
“Every Day at Low Cost (EDLC)”. Out of the 11 ratios analysed, only the Operating Expenses
To Sales Ratio is on par with competitors and industry averages. 3 ratios are really good. Its
Asset Turnover is well above competitors. Its P-E Ratio is also strong, justifiable by its share
price. Its Dividend Payout Rate is at a phenomenal 44%, having increased the dividend for the
49th consecutive year.
However, the following 5 ratios are below average: Return On Ordinary Shareholders’
Equity, Return on Assets, Profit Margin, Gross Profit Rate and Cash Return On Sales Ratio.
Profit Margin (PM) and Gross Profit Rate (GPR) are low because of Walmart’s EDLC
business philosophy. This is Walmart’s competitive advantage over competitors, and they will
not deviate from it. Customers like to come to Walmart because of the low prices. Suppliers are
also required to reduce their production costs if they want to sell to Walmart. This is widely
known as The Walmart Effect (Kenton, 2022). Thus, lowering the Cost of Goods Sold (COGS
– 74.9% of Revenue in 2021) is almost impossible. Maybe Walmart could try to decrease
Selling, general and administrative expenses (SG&A – 20.6% of Revenue in 2021), for example
lowering managers’ salaries, and reducing advertising costs… However, reducing SG&A might
lead to lower Sales, or not being able to hire good managers. This decision should be considered
carefully.
To increase Return On Ordinary Shareholders’ Equity (ROE), Walmart could either try
to increase Net Profit or decrease Equity. Increasing Net Profit is difficult because it is hard to
lower COGS or SG&A, as discussed above. Decreasing Equity is not recommended, especially
when Retain Earnings are necessary to maintain the high Dividend Payout Rate. Thus, ROE is
almost impossible to improve.

18
 To increase Return on Assets (ROA), Walmart can either increase Net Profit or decrease
Total Assets. As discussed above, increasing Net Profit is not an option. Total Assets could be
reduced by lowering Property, Plant and Equipment (PPE) or Inventory (accounting for 38.6%
and 23.1% of Total Assets respectively). Walmart could try to use fewer buildings, and vehicles.
to meet current operations or use existing ones more efficiently. However, reducing PPE might
lead to deteriorating operations. Alternatively, Walmart could try to reduce its inventory.
However, reducing inventory might decrease Walmart’s bulk-buying power and raise costs.
To increase Cash Return on Sales ratio (CROSR), Walmart could try to get more cash
from its sales, maybe by collecting receivables more aggressively. However, this might drive
customers away to competitors, who might allow more relaxed payment terms.
Improving profitability ratios are very important, to signal to suppliers Walmart’s ability
to operate efficiently and make a profit.

19
 VII. LIMITATIONS

We acknowledge that our report still has many limitations.

Firstly, we chose the 2 competitors amongst the top 10 most prominent retailers in the
US. No comparisons were made with competitors of smaller sizes, or any retailers outside the
US. Analysis of a broader range of companies might provide more interesting insights into the
retail industry.
Secondly, we only gave recommendations on the ratios that are below average. That
might turn out to be a lopsided analysis. Improving other ratios might prove to be beneficial for
the company as well.
Thirdly, we only considered the ratios individually. We did not analyse how improving
one ratio might affect others. Financial ratios are intricately linked and are not easily separated.
Recommendations for 1 ratio while ignoring others might be too shallow. A deeper analysis
might be better.

20
 VIII. SUMMARY

In this report, we have analysed the 21 financial ratios for Walmart. We compared them
with past performance, and those of the 2 competitors: Home Depot and Target.
In each of the 3 categories (Liquidity, Solvency and Profitability ratios), Walmart is
doing average at best. Many ratios are low and need improvement. However, some low ratios
are consistent with Walmart’s business strategy of price leadership, for example, Profit Margin
and Gross Profit Rate. Despite some low ratios, Walmart still commands a very high P/E ratio
and pays very high dividends annually.
We gave recommendations on each of the ratios that are not doing well. Along with
every recommendation, there are precautions as well. Walmart’s management should consider
the overall impact on the whole enterprise carefully before implementation.

21
 REFERENCE

1. Kenton, W. (2022, April 28). Walmart Effect. Investopedia. Retrieved June 1, 2022, from
https://www.investopedia.com/terms/w/walmart-effect.asp
2. Target Corporation. (2022). Annual Report. Retrieved June 1, 2022, from
https://investors.target.com/static-files/836c7937-1e68-4445-aa98-9a19448f4334
3. The Home Depot, Inc. (2022). Annual Report. Retrieved June 1, 2022, from
https://ir.homedepot.com/~/media/Files/H/HomeDepot-
IR/2022/2021_AnnualReport_IR_Site_FINAL.pdf
4. Walmart Inc. (2020). Annual Report. Retrieved June 1, 2022, from
https://s2.q4cdn.com/056532643/files/doc_financials/2020/ar/Walmart_2020_Annual_Re
port.pdf
5. Walmart Inc. (2021). Annual Report. Retrieved June 1, 2022, from
https://s2.q4cdn.com/056532643/files/doc_financials/2021/ar/WMT_2021_AnnualReport.
pdf
6. Walmart Inc. (2022). Annual Report. Retrieved June 1, 2022, from
https://s2.q4cdn.com/056532643/files/doc_financials/2022/ar/WMT-FY2022-Annual-
Report.pdf

22
2022 Annual Report

o u r Fl y wheel
in g
u i ld Best, first
place to shop
B

Even more
items and
services

Customer and
Member Value

Health and
Wellness

Leveraging our
assets for B2B
opportunities

Financial
Services
Lower
Cost
 Walmart Inc.
Consolidated Statements of Income
Fiscal Years Ended January 31,
(Amounts in millions, except per share data) 2022 2021 2020
Revenues:
Net sales $ 567,762 $ 555,233 $ 519,926
Membership and other income 4,992 3,918 4,038
Total revenues 572,754 559,151 523,964
Costs and expenses:
Cost of sales 429,000 420,315 394,605
Operating, selling, general and administrative expenses 117,812 116,288 108,791
Operating income 25,942 22,548 20,568
Interest:
Debt 1,674 1,976 2,262
Finance lease 320 339 337
Interest income (158) (121) (189)
Interest, net 1,836 2,194 2,410
Loss on extinguishment of debt 2,410 — —
Other (gains) and losses 3,000 (210) (1,958)
Income before income taxes 18,696 20,564 20,116
Provision for income taxes 4,756 6,858 4,915
Consolidated net income 13,940 13,706 15,201
Consolidated net income attributable to noncontrolling interest (267) (196) (320)
Consolidated net income attributable to Walmart $ 13,673 $ 13,510 $ 14,881

Net income per common share:

Basic net income per common share attributable to Walmart $ 4.90 $ 4.77 $ 5.22
Diluted net income per common share attributable to Walmart 4.87 4.75 5.19

Weighted-average common shares outstanding:

Basic 2,792 2,831 2,850
Diluted 2,805 2,847 2,868

Dividends declared per common share $ 2.20 $ 2.16 $ 2.12

See accompanying notes.

53
 Walmart Inc.
Consolidated Statements of Comprehensive Income
Fiscal Years Ended January 31,
(Amounts in millions) 2022 2021 2020
Consolidated net income $ 13,940 $ 13,706 $ 15,201
Consolidated net income attributable to noncontrolling interest (267) (196) (320)
Consolidated net income attributable to Walmart 13,673 13,510 14,881

Other comprehensive income (loss), net of income taxes

Currency translation and other 2,442 842 286
Net investment hedges (1,202) (221) 122
Cash flow hedges (444) 235 (399)
Minimum pension liability 1,974 (30) (1,244)
Other comprehensive income (loss), net of income taxes 2,770 826 (1,235)
Other comprehensive (income) loss attributable to noncontrolling interest 230 213 (28)
Other comprehensive income (loss) attributable to Walmart 3,000 1,039 (1,263)

Comprehensive income, net of income taxes 16,710 14,532 13,966

Comprehensive (income) loss attributable to noncontrolling interest (37) 17 (348)
Comprehensive income attributable to Walmart $ 16,673 $ 14,549 $ 13,618

See accompanying notes.

54
 Walmart Inc.
Consolidated Balance Sheets

As of January 31,
(Amounts in millions) 2022 2021
ASSETS
Current assets:
Cash and cash equivalents $ 14,760 $ 17,741
Receivables, net 8,280 6,516
Inventories 56,511 44,949
Prepaid expenses and other 1,519 20,861
Total current assets 81,070 90,067

Property and equipment, net 94,515 92,201

Operating lease right-of-use assets 13,758 13,642
Finance lease right-of-use assets, net 4,351 4,005
Goodwill 29,014 28,983
Other long-term assets 22,152 23,598
Total assets $ 244,860 $ 252,496

LIABILITIES AND EQUITY

Current liabilities:
Short-term borrowings $ 410 $ 224
Accounts payable 55,261 49,141
Accrued liabilities 26,060 37,966
Accrued income taxes 851 242
Long-term debt due within one year 2,803 3,115
Operating lease obligations due within one year 1,483 1,466
Finance lease obligations due within one year 511 491
Total current liabilities 87,379 92,645

Long-term debt 34,864 41,194

Long-term operating lease obligations 13,009 12,909
Long-term finance lease obligations 4,243 3,847
Deferred income taxes and other 13,474 14,370

Commitments and contingencies

Equity:
Common stock 276 282
Capital in excess of par value 4,839 3,646
Retained earnings 86,904 88,763
Accumulated other comprehensive loss (8,766) (11,766)
Total Walmart shareholders' equity 83,253 80,925
Noncontrolling interest 8,638 6,606
Total equity 91,891 87,531
Total liabilities and equity $ 244,860 $ 252,496

See accompanying notes.

55
 Walmart Inc.
Consolidated Statements of Shareholders' Equity

Accumulated Total
Capital in Other Walmart
Common Stock Excess of Retained Comprehensive Shareholders' Noncontrolling Total
(Amounts in millions) Shares Amount Par Value Earnings Income (Loss) Equity Interest Equity
Balances as of February 1,
2019 2,878 $ 288 $ 2,965 $ 80,785 $ (11,542) $ 72,496 $ 7,138 $ 79,634

Adoption of new accounting

standards, net of income — — — (266) — (266) (34) (300)
taxes
Consolidated net income — — — 14,881 — 14,881 320 15,201
Other comprehensive income — — — — (1,263) (1,263) 28 (1,235)
(loss), net of income taxes
Cash dividends declared — — — (6,048) — (6,048) — (6,048)
($2.12 per share)
Purchase of Company stock (53) (5) (199) (5,435) — (5,639) — (5,639)
Cash dividend declared to — — — — — — (475) (475)
noncontrolling interest
Sale of subsidiary stock — — 37 — — 37 15 52
Other 7 1 444 26 — 471 (109) 362
Balances as of January 31,
2020 2,832 284 3,247 83,943 (12,805) 74,669 6,883 81,552

Consolidated net income — — — 13,510 — 13,510 196 13,706

Other comprehensive income — — — — 1,039 1,039 (213) 826
(loss), net of income taxes
Cash dividends declared — — — (6,116) — (6,116) — (6,116)
($2.16 per share)
Purchase of Company stock (20) (2) (97) (2,559) — (2,658) — (2,658)
Cash dividend declared to — — — — — — (365) (365)
noncontrolling interest
Sale of subsidiary stock — — 29 — — 29 111 140
Other 9 — 467 (15) — 452 (6) 446
Balances as of January 31,
2021 2,821 282 3,646 88,763 (11,766) 80,925 6,606 87,531

Consolidated net income — — 13,673 — 13,673 267 13,940

Other comprehensive income — — — — 3,000 3,000 (230) 2,770
(loss), net of income taxes
Cash dividends declared — — — (6,152) — (6,152) — (6,152)
($2.20 per share)
Purchase of Company stock (70) (7) (426) (9,375) — (9,808) — (9,808)
Cash dividend declared to — — — — — — (416) (416)
noncontrolling interest
Sale of subsidiary stock — — 952 — — 952 2,287 3,239
Other 10 1 667 (5) — 663 124 787
Balances as of January 31,
2022 2,761 $ 276 $ 4,839 $ 86,904 $ (8,766) $ 83,253 $ 8,638 $ 91,891

See accompanying notes.

56
 Walmart Inc.
Consolidated Statements of Cash Flows

Fiscal Years Ended January 31,

(Amounts in millions) 2022 2021 2020
Cash flows from operating activities:
Consolidated net income $ 13,940 $ 13,706 $ 15,201
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization 10,658 11,152 10,987
Net unrealized and realized (gains) and losses 2,440 (8,589) (1,886)
Losses on disposal of business operations 433 8,401 15
Asda pension contribution — — (1,036)
Deferred income taxes (755) 1,911 320
Loss on extinguishment of debt 2,410 — —
Other operating activities 1,652 1,521 1,981
Changes in certain assets and liabilities, net of effects of acquisitions and dispositions:
Receivables, net (1,796) (1,086) 154
Inventories (11,764) (2,395) (300)
Accounts payable 5,520 6,966 (274)
Accrued liabilities 1,404 4,623 186
Accrued income taxes 39 (136) (93)
Net cash provided by operating activities 24,181 36,074 25,255

Cash flows from investing activities:

Payments for property and equipment (13,106) (10,264) (10,705)
Proceeds from the disposal of property and equipment 394 215 321
Proceeds from disposal of certain operations, net of divested cash 7,935 56 833
Payments for business acquisitions, net of cash acquired (359) (180) (56)
Other investing activities (879) 102 479
Net cash used in investing activities (6,015) (10,071) (9,128)

Cash flows from financing activities:

Net change in short-term borrowings 193 (324) (4,656)
Proceeds from issuance of long-term debt 6,945 — 5,492
Repayments of long-term debt (13,010) (5,382) (1,907)
Premiums paid to extinguish debt (2,317) — —
Dividends paid (6,152) (6,116) (6,048)
Purchase of Company stock (9,787) (2,625) (5,717)
Dividends paid to noncontrolling interest (424) (434) (555)
Sale of subsidiary stock 3,239 140 52
Other financing activities (1,515) (1,376) (960)
Net cash used in financing activities (22,828) (16,117) (14,299)

Effect of exchange rates on cash, cash equivalents and restricted cash (140) 235 (69)

Net increase (decrease) in cash, cash equivalents and restricted cash (4,802) 10,121 1,759
Change in cash and cash equivalents reclassified from (to) assets held for sale 1,848 (1,848) —
Cash, cash equivalents and restricted cash at beginning of year 17,788 9,515 7,756
Cash, cash equivalents and restricted cash at end of year $ 14,834 $ 17,788 $ 9,515

Supplemental disclosure of cash flow information:

Income taxes paid $ 5,918 $ 5,271 $ 3,616
Interest paid 2,237 2,216 2,464

See accompanying notes.

57
 2021 Annual Report

Uniquely Walmart
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Walmart Inc.
2020 Annual Report

“OUR PEOPLE
MAKE THE DIFFERENCE”
—Sam Walton
 Walmart Inc.
Consolidated Statements of Income

Fiscal Years Ended January 31,

(Amounts in millions, except per share data) 2020 2019 2018
Revenues:
Net sales $ 519,926 $ 510,329 $ 495,761
Membership and other income 4,038 4,076 4,582
Total revenues 523,964 514,405 500,343
Costs and expenses:
Cost of sales 394,605 385,301 373,396
Operating, selling, general and administrative expenses 108,791 107,147 106,510
Operating income 20,568 21,957 20,437
Interest:
Debt 2,262 1,975 1,978
Finance, capital lease and financing obligations 337 371 352
Interest income (189) (217) (152)
Interest, net 2,410 2,129 2,178
Loss on extinguishment of debt — — 3,136
Other (gains) and losses (1,958) 8,368 —
Income before income taxes 20,116 11,460 15,123
Provision for income taxes 4,915 4,281 4,600
Consolidated net income 15,201 7,179 10,523
Consolidated net income attributable to noncontrolling interest (320) (509) (661)
Consolidated net income attributable to Walmart $ 14,881 $ 6,670 $ 9,862

Net income per common share:

Basic net income per common share attributable to Walmart $ 5.22 $ 2.28 $ 3.29
Diluted net income per common share attributable to Walmart 5.19 2.26 3.28

Weighted-average common shares outstanding:

Basic 2,850 2,929 2,995
Diluted 2,868 2,945 3,010

Dividends declared per common share $ 2.12 $ 2.08 $ 2.04

See accompanying notes.

50
 Walmart Inc.
Consolidated Statements of Comprehensive Income

Fiscal Years Ended January 31,

(Amounts in millions) 2020 2019 2018
Consolidated net income $ 15,201 $ 7,179 $ 10,523
Consolidated net income attributable to noncontrolling interest (320) (509) (661)
Consolidated net income attributable to Walmart 14,881 6,670 9,862

Other comprehensive income (loss), net of income taxes

Currency translation and other 286 (226) 2,540
Net investment hedges 122 272 (405)
Cash flow hedges (399) (290) 437
Minimum pension liability (1,244) 131 147
Unrealized gain on available-for-sale securities — — 1,501
Other comprehensive income (loss), net of income taxes (1,235) (113) 4,220
Other comprehensive (income) loss attributable to noncontrolling interest (28) 188 (169)
Other comprehensive income (loss) attributable to Walmart (1,263) 75 4,051

Comprehensive income, net of income taxes 13,966 7,066 14,743

Comprehensive income attributable to noncontrolling interest (348) (321) (830)
Comprehensive income attributable to Walmart $ 13,618 $ 6,745 $ 13,913

See accompanying notes.

51
 Walmart Inc.
Consolidated Balance Sheets

As of January 31,
(Amounts in millions) 2020 2019
ASSETS
Current assets:
Cash and cash equivalents $ 9,465 $ 7,722
Receivables, net 6,284 6,283
Inventories 44,435 44,269
Prepaid expenses and other 1,622 3,623
Total current assets 61,806 61,897

Property and equipment, net 105,208 104,317

Operating lease right-of-use assets 17,424 —
Finance lease right-of-use assets, net 4,417 —
Property under capital lease and financing obligations, net — 7,078
Goodwill 31,073 31,181
Other long-term assets 16,567 14,822
Total assets $ 236,495 $ 219,295

LIABILITIES AND EQUITY

Current liabilities:
Short-term borrowings $ 575 $ 5,225
Accounts payable 46,973 47,060
Accrued liabilities 22,296 22,159
Accrued income taxes 280 428
Long-term debt due within one year 5,362 1,876
Operating lease obligations due within one year 1,793 —
Finance lease obligations due within one year 511 —
Capital lease and financing obligations due within one year — 729
Total current liabilities 77,790 77,477

Long-term debt 43,714 43,520

Long-term operating lease obligations 16,171 —
Long-term finance lease obligations 4,307 —
Long-term capital lease and financing obligations — 6,683
Deferred income taxes and other 12,961 11,981

Commitments and contingencies

Equity:
Common stock 284 288
Capital in excess of par value 3,247 2,965
Retained earnings 83,943 80,785
Accumulated other comprehensive loss (12,805) (11,542)
Total Walmart shareholders' equity 74,669 72,496
Noncontrolling interest 6,883 7,138
Total equity 81,552 79,634
Total liabilities and equity $ 236,495 $ 219,295

See accompanying notes.

52
 Walmart Inc.
Consolidated Statements of Shareholders' Equity

Accumulated Total
Capital in Other Walmart
Common Stock Excess of Retained Comprehensive Shareholders' Noncontrolling Total
(Amounts in millions) Shares Amount Par Value Earnings Income (Loss) Equity Interest Equity
Balances as of February 1,
2017 3,048 $ 305 $ 2,371 $ 89,354 $ (14,232) $ 77,798 $ 2,737 $ 80,535

Consolidated net income — — — 9,862 — 9,862 661 10,523

Other comprehensive income — — — — 4,051 4,051 169 4,220
(loss), net of income taxes
Cash dividends declared — — — (6,124) — (6,124) — (6,124)
($2.04 per share)
Purchase of Company stock (103) (10) (219) (7,975) — (8,204) — (8,204)
Cash dividend declared to — — — — — — (687) (687)
noncontrolling interest
Other 7 — 496 (10) — 486 73 559
Balances as of January 31,
2018 2,952 295 2,648 85,107 (10,181) 77,869 2,953 80,822

Adoption of new accounting

standards on February 1, — — — 2,361 (1,436) 925 (1) 924
2018, net of income taxes
Consolidated net income — — — 6,670 — 6,670 509 7,179
Other comprehensive income — — — — 75 75 (188) (113)
(loss), net of income taxes
Cash dividends declared — — — (6,102) — (6,102) — (6,102)
($2.08 per share)
Purchase of Company stock (80) (8) (245) (7,234) — (7,487) — (7,487)
Cash dividend declared to — — — — — — (488) (488)
noncontrolling interest
Noncontrolling interest of — — — — — — 4,345 4,345
acquired entity
Other 6 1 562 (17) — 546 8 554
Balances as of January 31,
2019 2,878 288 2,965 80,785 (11,542) 72,496 7,138 79,634

Adoption of new accounting

standards on February 1, — — — (266) — (266) (34) (300)
2019, net of income taxes
Consolidated net income — — — 14,881 — 14,881 320 15,201
Other comprehensive income — — — — (1,263) (1,263) 28 (1,235)
(loss), net of income taxes
Cash dividends declared — — — (6,048) — (6,048) — (6,048)
($2.12 per share)
Purchase of Company stock (53) (5) (199) (5,435) — (5,639) — (5,639)
Cash dividends declared to — — — — — — (475) (475)
noncontrolling interest
Other 7 1 481 26 — 508 (94) 414
Balances as of January 31,
2020 2,832 $ 284 $ 3,247 $ 83,943 $ (12,805) $ 74,669 $ 6,883 $ 81,552

See accompanying notes.

53
 Walmart Inc.
Consolidated Statements of Cash Flows

Fiscal Years Ended January 31,

(Amounts in millions) 2020 2019 2018
Cash flows from operating activities:
Consolidated net income $ 15,201 $ 7,179 $ 10,523
Adjustments to reconcile consolidated net income to net cash provided by operating
activities:
Depreciation and amortization 10,987 10,678 10,529
Unrealized (gains) and losses (1,886) 3,516 —
(Gains) and losses for disposal of business operations 15 4,850 —
Asda pension contribution (1,036) — —
Deferred income taxes 320 (499) (304)
Loss on extinguishment of debt — — 3,136
Other operating activities 1,981 1,734 1,210
Changes in certain assets and liabilities, net of effects of acquisitions:
Receivables, net 154 (368) (1,074)
Inventories (300) (1,311) (140)
Accounts payable (274) 1,831 4,086
Accrued liabilities 186 183 928
Accrued income taxes (93) (40) (557)
Net cash provided by operating activities 25,255 27,753 28,337

Cash flows from investing activities:

Payments for property and equipment (10,705) (10,344) (10,051)
Proceeds from the disposal of property and equipment 321 519 378
Proceeds from the disposal of certain operations 833 876 1,046
Payments for business acquisitions, net of cash acquired (56) (14,656) (375)
Other investing activities 479 (431) (77)
Net cash used in investing activities (9,128) (24,036) (9,079)

Cash flows from financing activities:

Net change in short-term borrowings (4,656) (53) 4,148
Proceeds from issuance of long-term debt 5,492 15,872 7,476
Repayments of long-term debt (1,907) (3,784) (13,061)
Premiums paid to extinguish debt — — (3,059)
Dividends paid (6,048) (6,102) (6,124)
Purchase of Company stock (5,717) (7,410) (8,296)
Dividends paid to noncontrolling interest (555) (431) (690)
Purchase of noncontrolling interest — — (8)
Other financing activities (908) (629) (261)
Net cash used in financing activities (14,299) (2,537) (19,875)

Effect of exchange rates on cash, cash equivalents and restricted cash (69) (438) 487

Net increase (decrease) in cash, cash equivalents and restricted cash 1,759 742 (130)
Cash, cash equivalents and restricted cash at beginning of year 7,756 7,014 7,144
Cash, cash equivalents and restricted cash at end of year $ 9,515 $ 7,756 $ 7,014

Supplemental disclosure of cash flow information:

Income taxes paid $ 3,616 $ 3,982 $ 6,179
Interest paid 2,464 2,348 2,450

See accompanying notes.

54
ANNUAL REPORT 2021
Table of Contents

THE HOME DEPOT, INC.

CONSOLIDATED BALANCE SHEETS
January 30, January 31,
in millions, except per share data 2022 2021
Assets
Current assets:
Cash and cash equivalents $ 2,343 $ 7,895
Receivables, net 3,426 2,992
Merchandise inventories 22,068 16,627
Other current assets 1,218 963
Total current assets 29,055 28,477
Net property and equipment 25,199 24,705
Operating lease right-of-use assets 5,968 5,962
Goodwill 7,449 7,126
Other assets 4,205 4,311
Total assets $ 71,876 $ 70,581

Liabilities and Stockholders’ Equity

Current liabilities:
Short-term debt $ 1,035 $ —
Accounts payable 13,462 11,606
Accrued salaries and related expenses 2,426 2,463
Sales taxes payable 848 774
Deferred revenue 3,596 2,823
Income taxes payable 158 193
Current installments of long-term debt 2,447 1,416
Current operating lease liabilities 830 828
Other accrued expenses 3,891 3,063
Total current liabilities 28,693 23,166
Long-term debt, excluding current installments 36,604 35,822
Long-term operating lease liabilities 5,353 5,356
Deferred income taxes 909 1,131
Other long-term liabilities 2,013 1,807
Total liabilities 73,572 67,282

Common stock, par value $0.05; authorized: 10,000 shares; issued: 1,792 shares
at January 30, 2022 and 1,789 shares at January 31, 2021; outstanding: 1,035
shares at January 30, 2022 and 1,077 shares at January 31, 2021 90 89
Paid-in capital 12,132 11,540
Retained earnings 67,580 58,134
Accumulated other comprehensive loss (704) (671)
Treasury stock, at cost, 757 shares at January 30, 2022 and 712 shares at
January 31, 2021 (80,794) (65,793)
Total stockholders’ (deficit) equity (1,696) 3,299
Total liabilities and stockholders’ equity $ 71,876 $ 70,581
—————
See accompanying notes to consolidated financial statements.

37
Table of Contents

THE HOME DEPOT, INC.

CONSOLIDATED STATEMENTS OF EARNINGS
Fiscal Fiscal Fiscal
in millions, except per share data 2021 2020 2019
Net sales $ 151,157 $ 132,110 $ 110,225
Cost of sales 100,325 87,257 72,653
Gross profit 50,832 44,853 37,572
Operating expenses:
Selling, general and administrative 25,406 24,447 19,740
Depreciation and amortization 2,386 2,128 1,989
Total operating expenses 27,792 26,575 21,729
Operating income 23,040 18,278 15,843
Interest and other (income) expense:
Interest and investment income (44) (47) (73)
Interest expense 1,347 1,347 1,201
Interest and other, net 1,303 1,300 1,128
Earnings before provision for income taxes 21,737 16,978 14,715
Provision for income taxes 5,304 4,112 3,473
Net earnings $ 16,433 $ 12,866 $ 11,242

Basic weighted average common shares 1,054 1,074 1,093

Basic earnings per share $ 15.59 $ 11.98 $ 10.29

Diluted weighted average common shares 1,058 1,078 1,097

Diluted earnings per share $ 15.53 $ 11.94 $ 10.25
—————
See accompanying notes to consolidated financial statements.

38
Table of Contents

THE HOME DEPOT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Fiscal Fiscal Fiscal
in millions 2021 2020 2019
Net earnings $ 16,433 $ 12,866 $ 11,242
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments (77) 60 53
Cash flow hedges 9 8 8
Other 35 — 3
Total other comprehensive (loss) income, net of tax (33) 68 64
Comprehensive income $ 16,400 $ 12,934 $ 11,306
—————
See accompanying notes to consolidated financial statements.

39
Table of Contents

THE HOME DEPOT, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Fiscal Fiscal Fiscal
in millions 2021 2020 2019
Common Stock:
Balance at beginning of year $ 89 $ 89 $ 89
Shares issued under employee stock plans 1 — —
Balance at end of year 90 89 89

Paid-in Capital:
Balance at beginning of year 11,540 11,001 10,578
Shares issued under employee stock plans 194 229 172
Stock-based compensation expense 398 310 251
Balance at end of year 12,132 11,540 11,001

Retained Earnings:
Balance at beginning of year 58,134 51,729 46,423
Cumulative effect of accounting changes — — 26
Net earnings 16,433 12,866 11,242
Cash dividends (6,985) (6,451) (5,958)
Other (2) (10) (4)
Balance at end of year 67,580 58,134 51,729

Accumulated Other Comprehensive Loss:

Balance at beginning of year (671) (739) (772)
Cumulative effect of accounting changes — — (31)
Foreign currency translation adjustments, net of tax (77) 60 53
Cash flow hedges, net of tax 9 8 8
Other, net of tax 35 — 3
Balance at end of year (704) (671) (739)

Treasury Stock:
Balance at beginning of year (65,793) (65,196) (58,196)
Repurchases of common stock (15,001) (597) (7,000)
Balance at end of year (80,794) (65,793) (65,196)
Total stockholders’ (deficit) equity $ (1,696) $ 3,299 $ (3,116)
—————
See accompanying notes to consolidated financial statements.

40
Table of Contents

THE HOME DEPOT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Fiscal Fiscal
in millions 2021 2020 2019
Cash Flows from Operating Activities:
Net earnings $ 16,433 $ 12,866 $ 11,242
Reconciliation of net earnings to net cash provided by operating
activities:
Depreciation and amortization 2,862 2,519 2,296
Stock-based compensation expense 399 310 251
Changes in receivables, net (435) (465) (170)
Changes in merchandise inventories (5,403) (1,657) (593)
Changes in other current assets (330) 43 (135)
Changes in accounts payable and accrued expenses 2,401 5,118 32
Changes in deferred revenue 775 702 334
Changes in income taxes payable (51) (149) 44
Changes in deferred income taxes (276) (569) 202
Other operating activities 196 121 184
Net cash provided by operating activities 16,571 18,839 13,687

Cash Flows from Investing Activities:

Capital expenditures (2,566) (2,463) (2,678)
Payments for businesses acquired, net (421) (7,780) —
Other investing activities 18 73 25
Net cash used in investing activities (2,969) (10,170) (2,653)

Cash Flows from Financing Activities:

Proceeds from (repayments of) short-term debt, net 1,035 (974) (365)
Proceeds from long-term debt, net of discounts and premiums 2,979 7,933 3,420
Repayments of long-term debt (1,532) (2,872) (1,070)
Repurchases of common stock (14,809) (791) (6,965)
Proceeds from sales of common stock 337 326 280
Cash dividends (6,985) (6,451) (5,958)
Other financing activities (145) (154) (140)
Net cash used in financing activities (19,120) (2,983) (10,798)
Change in cash and cash equivalents (5,518) 5,686 236
Effect of exchange rate changes on cash and cash equivalents (34) 76 119
Cash and cash equivalents at beginning of year 7,895 2,133 1,778
Cash and cash equivalents at end of year $ 2,343 $ 7,895 $ 2,133

Supplemental Disclosures:
Cash paid for income taxes $ 5,504 $ 4,654 $ 3,220
Cash paid for interest, net of interest capitalized 1,269 1,241 1,112
Non-cash capital expenditures 421 274 136
—————
See accompanying notes to consolidated financial statements.

41
View the digital version
of our Annual Report at
¬
Target.com/annualreport. Annual
1000 Nicollet Mall Report
2021
Minneapolis, MN 55403
612.304.6073
 FINANCIAL STATEMENTS Table of Contents
Index to Financial Statements
Consolidated Statements of Operations

(millions, except per share data) 2021 2020 2019

Sales $ 104,611 $ 92,400 $ 77,130
Other revenue 1,394 1,161 982
Total revenue 106,005 93,561 78,112
Cost of sales 74,963 66,177 54,864
Selling, general and administrative expenses 19,752 18,615 16,233
Depreciation and amortization (exclusive of depreciation included in cost
of sales) 2,344 2,230 2,357
Operating income 8,946 6,539 4,658
Net interest expense 421 977 477
Net other (income) / expense (382) 16 (9)
Earnings from continuing operations before income taxes 8,907 5,546 4,190
Provision for income taxes 1,961 1,178 921
Net earnings from continuing operations 6,946 4,368 3,269
Discontinued operations, net of tax — — 12
Net earnings $ 6,946 $ 4,368 $ 3,281
Basic earnings per share
Continuing operations $ 14.23 $ 8.72 $ 6.39
Discontinued operations — — 0.02
Net earnings per share $ 14.23 $ 8.72 $ 6.42
Diluted earnings per share
Continuing operations $ 14.10 $ 8.64 $ 6.34
Discontinued operations — — 0.02
Net earnings per share $ 14.10 $ 8.64 $ 6.36
Weighted average common shares outstanding
Basic 488.1 500.6 510.9
Diluted 492.7 505.4 515.6
Antidilutive shares — — —
Note: Per share amounts may not foot due to rounding.

See accompanying Notes to Consolidated Financial Statements.

TARGET CORPORATION 2021 Form 10-K 38

 FINANCIAL STATEMENTS Table of Contents
Index to Financial Statements
Consolidated Statements of Comprehensive Income

(millions) 2021 2020 2019

Net earnings $ 6,946 $ 4,368 $ 3,281
Other comprehensive income / (loss), net of tax
Pension benefit liabilities 152 102 (65)
Currency translation adjustment and cash flow hedges 51 10 2
Other comprehensive income / (loss) 203 112 (63)
Comprehensive income $ 7,149 $ 4,480 $ 3,218

See accompanying Notes to Consolidated Financial Statements.

39 TARGET CORPORATION 2021 Form 10-K

 FINANCIAL STATEMENTS Table of Contents
Index to Financial Statements
Consolidated Statements of Financial Position

January 29, January 30,

(millions, except footnotes) 2022 2021
Assets
Cash and cash equivalents $ 5,911 $ 8,511
Inventory 13,902 10,653
Other current assets 1,760 1,592
Total current assets 21,573 20,756
Property and equipment
Land 6,164 6,141
Buildings and improvements 32,985 31,557
Fixtures and equipment 6,407 5,914
Computer hardware and software 2,505 2,765
Construction-in-progress 1,257 780
Accumulated depreciation (21,137) (20,278)
Property and equipment, net 28,181 26,879
Operating lease assets 2,556 2,227
Other noncurrent assets 1,501 1,386
Total assets $ 53,811 $ 51,248
Liabilities and shareholders' investment
Accounts payable $ 15,478 $ 12,859
Accrued and other current liabilities 6,098 6,122
Current portion of long-term debt and other borrowings 171 1,144
Total current liabilities 21,747 20,125
Long-term debt and other borrowings 13,549 11,536
Noncurrent operating lease liabilities 2,493 2,218
Deferred income taxes 1,566 990
Other noncurrent liabilities 1,629 1,939
Total noncurrent liabilities 19,237 16,683
Shareholders' investment
Common stock 39 42
Additional paid-in capital 6,421 6,329
Retained earnings 6,920 8,825
Accumulated other comprehensive loss (553) (756)
Total shareholders' investment 12,827 14,440
Total liabilities and shareholders' investment $ 53,811 $ 51,248
Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 471,274,073 shares issued and outstanding
as of January 29, 2022; 500,877,129 shares issued and outstanding as of January 30, 2021.

Preferred Stock Authorized 5,000,000 shares, $0.01 par value; no shares were issued or outstanding during any
period presented.

See accompanying Notes to Consolidated Financial Statements.

TARGET CORPORATION 2021 Form 10-K 40

 FINANCIAL STATEMENTS Table of Contents
Index to Financial Statements
Consolidated Statements of Cash Flows

(millions) 2021 2020 2019

Operating activities
Net earnings $ 6,946 $ 4,368 $ 3,281
Earnings from discontinued operations, net of tax — — 12
Net earnings from continuing operations 6,946 4,368 3,269
Adjustments to reconcile net earnings to cash provided by operations:
Depreciation and amortization 2,642 2,485 2,604
Share-based compensation expense 228 200 147
Deferred income taxes 522 (184) 178
Gain on Dermstore sale (335) — —
Loss on debt extinguishment — 512 10
Noncash losses / (gains) and other, net 67 86 29
Changes in operating accounts:
Inventory (3,249) (1,661) 505
Other assets (78) (137) 18
Accounts payable 2,628 2,925 140
Accrued and other liabilities (746) 1,931 199
Cash provided by operating activities—continuing operations 8,625 10,525 7,099
Cash provided by operating activities—discontinued operations — — 18
Cash provided by operating activities 8,625 10,525 7,117
Investing activities
Expenditures for property and equipment (3,544) (2,649) (3,027)
Proceeds from disposal of property and equipment 27 42 63
Proceeds from Dermstore sale 356 — —
Other investments 7 16 20
Cash required for investing activities (3,154) (2,591) (2,944)
Financing activities
Additions to long-term debt 1,972 2,480 1,739
Reductions of long-term debt (1,147) (2,415) (2,069)
Dividends paid (1,548) (1,343) (1,330)
Repurchase of stock (7,356) (745) (1,565)
Stock option exercises 8 23 73
Cash required for financing activities (8,071) (2,000) (3,152)
Net (decrease) / increase in cash and cash equivalents (2,600) 5,934 1,021
Cash and cash equivalents at beginning of period 8,511 2,577 1,556
Cash and cash equivalents at end of period $ 5,911 $ 8,511 $ 2,577
Supplemental information
Interest paid, net of capitalized interest $ 414 $ 939 $ 492
Income taxes paid 2,063 1,031 696
Leased assets obtained in exchange for new finance lease liabilities 288 428 379
Leased assets obtained in exchange for new operating lease liabilities 580 262 464

See accompanying Notes to Consolidated Financial Statements.

41 TARGET CORPORATION 2021 Form 10-K

 FINANCIAL STATEMENTS Table of Contents
Index to Financial Statements
Consolidated Statements of Shareholders' Investment
Common Stock Additional Accumulated Other
Stock Par Paid-in Retained Comprehensive
(millions) Shares Value Capital Earnings (Loss) / Income Total
February 2, 2019 517.8 $ 43 $ 6,042 $ 6,017 $ (805) $ 11,297
Net earnings — — — 3,281 — 3,281
Other comprehensive loss — — — — (63) (63)
Dividends declared — — — (1,345) — (1,345)
Repurchase of stock (16.0) (1) — (1,520) — (1,521)
Stock options and awards 2.4 — 184 — — 184
February 1, 2020 504.2 $ 42 $ 6,226 $ 6,433 $ (868) $ 11,833
Net earnings — — — 4,368 — 4,368
Other comprehensive income — — — — 112 112
Dividends declared — — — (1,367) — (1,367)
Repurchase of stock (5.7) — — (609) — (609)
Stock options and awards 2.4 — 103 — — 103
January 30, 2021 500.9 $ 42 $ 6,329 $ 8,825 $ (756) $ 14,440
Net earnings — — — 6,946 — 6,946
Other comprehensive income — — — — 203 203
Dividends declared — — — (1,655) — (1,655)
Repurchase of stock (31.3) (3) — (7,196) — (7,199)
Stock options and awards 1.7 — 92 — — 92
January 29, 2022 471.3 $ 39 $ 6,421 $ 6,920 $ (553) $ 12,827
We declared $3.38, $2.70, and $2.62 dividends per share for the twelve months ended January 29, 2022,
January 30, 2021, and February 1, 2020, respectively.

See accompanying Notes to Consolidated Financial Statements.

TARGET CORPORATION 2021 Form 10-K 42