Introduction
Economic condition is the state of the economy of a particular area or country at a given period. Economic circumstances shift during business and economic cycles. Conditions are regarded as friendly and favorable while the economy is expanding and hostile and unfavorable when it is contracting. Macroeconomic factors influence a company’s motivation, including unemployment, inflation, and monetary policy. This paper will discuss the analysis of shareholders for Walmart based on finance, performance, employment, and its factors of production.
Influences on Economic Conditions
Walmart is one of the world’s largest companies and is thus subject to significant political pressure. For the past twenty years, Walmart’s lobbying budget has steadily risen. The annual cost of lobbying for this group has increased from $2 million in 2000 to about $19 million (Martínez et al., 2022). Given its size, a stable political climate is crucial for carrying out a wide range of corporate operations. Walmart has earned a reputation where employees may feel appreciated and valued. In 2015, Walmart decided to raise its minimum wage to $9 per hour to improve its image (Martínez et al., 2022). The biggest sources of market risk are fluctuations in interest rates and market value that are a result of the poor environmental conditions of the company. Walmart is affected, and governmental and legal considerations also impact its success. As a multinational firm, Walmart must follow all applicable laws and regulations from organizations like the World Trade Organization.
The Company’s Performance Previous Year and Current Year
Walmart was allowed to flourish in a benign political climate in the United States and elsewhere. An estimated $124.7 billion was added to Walmart’s bottom line in 2021, up from $121.2 billion the year before (Martínez et al., 2022). In 2021, the firm earned $3033 million in net income and maintained a current ratio of 0.81, which was above the 0.5 average for the business sector (Martínez et al., 2022). In the same year, Walmart partnered with Google on voice shopping to use its extensive retail network for hassle-free online returns. The corporation also benefited from a favorable legal and economic climate. Since a substantial portion of its income went toward paying salaries, this had only a limited effect on the company’s bottom line. Changes in the value of currencies have a significant impact on Walmart.
Year-Over-Year Performance from the Past Two Years
The company earned enough money from its assets when the ROA went up. Investors anticipated growth from Walmart, as indicated by the company’s P/E ratio of 14.26 in 2020 and 18.01 in 2021 (Martínez et al., 2022). The firm had a price-to-book value ratio of 2.45 in 2020 and 3.09 in 2021 (Martínez et al., 2022). The firm had a return on investment of 5.5558 in 2020 and 7.1887 in 2021 (Martínez et al., 2022). Walmart’s profit after tax on equity was 14.0359 percent in 2020 and 18.7476 percent in 2021 (Martínez et al., 2022). If the ratio is high, the firm’s future ROA is expected to be healthy.
Conclusion
The sole goal of every successful firm is to increase profits. Of course, they cannot control the external economic conditions that significantly impact how well their business does. The political climate, the state of the economy, the legislative landscape, and technological advancements are all external influences that may significantly impact an organization’s bottom line. To maintain profitability and operational stability in the face of fluctuating economic conditions, Walmart frequently raises and lowers its pricing across the board when a country experiences a significant economic shift. Therefore, management should consider these factors while formulating a plan for business growth.
Reference
Martínez, A. B., Galván, R. S., & Alam, S. (2022). Financial analysis of retail business organization: A case of Wal-Mart stores, Inc. Nile Journal of Business and Economics, 3(5), 67. Web.