2

Problem 28-3 Performance measures

The following table gives abbreviated balance sheets and income statements for Walmart. At the end of fiscal 2017, Walmart had 3,045 million shares outstanding with a share price of $140. The company's weighted-average cost of capital was about 5%. Assume a tax rate of 35%.

Balance Sheet (figures in $ millions)
	End of Year			Start of Year
Assets
Current assets:
Cash and marketable securities	$	6,926		$	7,037
Accounts receivable		5,784			6,005
Inventories		43,953			43,216
Other current assets		3,681			2,111
Total current assets	$	60,344		$	58,369
Fixed assets:
Net fixed assets	$	114,988		$	114,348
Other long-term assets		30,210			27,128
Total assets	$	205,542		$	199,845
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	46,262		$	41,603
Other current liabilities		32,599			25,665
Total current liabilities	$	78,861		$	67,268
Long-term debt		36,995			42,188
Other long-term liabilities		11,477			12,251
Total liabilities	$	127,333		$	121,707
Total shareholders' equity		78,209			78,138
Total liabilities and shareholders equity	$	205,542		$	199,845
Income Statement (figures in $ millions)
Net sales	$	500,513		$	486,043
Cost of goods sold		373,566			361,426
Selling, general, and administrative expenses		96,151			91,943
Depreciation		10,699			10,250
Earnings before interest and taxes (EBIT)	$	20,097		$	22,424
Interest expense		2,348			2,437
Taxable income	$	17,749		$	19,987
Tax		4,600			6,995
Net income	$	13,149		$	12,992
Dividends		6,294			6,865
Addition to retained earnings	$	6,855		$	6,127

a. Calculate the market value added. (Do not round intermediate calculations. Enter your answer in millions rounded to nearest whole number.)

b. Calculate the market-to-book ratio. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

c. Calculate the economic value added. (Do not round intermediate calculations. Enter your answer in millions rounded to nearest whole number.)

d. Calculate the return on start-of-the-year capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

5

If Microcharges customers take on average 145 days to pay their bills. What is its receivables turnover? Assume a 365-day year. (Round your answer to 3 decimal places.)