1. Consult the spreadsheet entitled "Walmart Cost of Capital Supplement." Explain how Dale and Lee have calculated Walmart's cost of capital.
2. Do you agree with their estimate of Walmart's WACC? Why or why not? How could the estimate be improved?
3. What companies do you think might be comparable to Walmart? Can you find the WACC for any of them online?
4. 

Transcribed Image Text:

Walmart Inc. Sources of Financing As of January 31, 2019 ($ millions) 1 Long-Term Debt (interest-bearing): Long-Term Debt & Capital Leases Current Portion of Long-Term Debt & Capital Leases 2 Short-term Borrowings (interest-bearing) 3 Other Short-Term: Accounts Payable Accrued Liabilities Other Current Liabilities 4 Deferred Income Taxes (estimated) 5 Common Stock and Paid-In Capital 6 Retained Earnings 7 Other Items Other Non-Current Liabilities Other Comprehensive Income (Loss) Non-Controlling Interest Total Liabilities & Equity 50,203 2,605 47,060 22,159 428 5,991 (11,542) 7,138 52,808 5,225 69,647 5,991 3,253 80,785 1,587 219,295 24.1% 2.4% 31.8% 2.7% 1.5% 36.8% 0.7% 100.0% Walmart Inc. Sources of Financing As of January 31, 2019 ($ millions) 1 Long-Term Debt (interest-bearing): Long-Term Debt & Capital Leases Current Portion of Long-Term Debt & Capital Leases 2 Short-term Borrowings (interest-bearing) 3 Other Short-Term: Accounts Payable Accrued Liabilities Other Current Liabilities 4 Deferred Income Taxes (estimated) 5 Common Stock and Paid-In Capital 6 Retained Earnings 7 Other Items Other Non-Current Liabilities Other Comprehensive Income (Loss) Non-Controlling Interest Total Liabilities & Equity 50,203 2,605 47,060 22,159 428 5,991 (11,542) 7,138 52,808 5,225 69,647 5,991 3,253 80,785 1,587 219,295 24.1% 2.4% 31.8% 2.7% 1.5% 36.8% 0.7% 100.0%