Question

When Walmart sells an item for $100, what was their cost on that item? Do you have a number in your head? OK, now let’s find out. Here is a link to Walmart’s 2018 annual report. Walmart 2018 Annual Report Look on page 55 of the report (page 61 of the PDF) and you will find their income statement. You will see that their net sales for the year were $495,761 (that’s in millions; i.e. they left off six zeros, so it is actually $495,761,000,000; just under half a trillion dollars). A few lines below that you’ll see: Cost of Sales: $393,396; Our book uses the term Cost of Goods Sold; it’s the same thing: what they paid for the stuff the sold. Take their ratio of Cost of Sales/Net Sales and you get 79.3%. That means, on average, Walmart buys an item for $79.30 and sells it for $100. Their gross margin is the difference, $20.70. For your first posting of the week, look up the income statement of some other retailer and do the same analysis. Use the company's actual income statement in their annual report. DO NOT get data from an aggregator like Yahoo Finance, Nasdaq, Morningstar, etc. Post a link to your source, and a page number so we can easily find it. Every student should do a different company. Put the company name in your heading. For your Sunday response posting, look at the figures supplied by two other students and compare them. Why do you suppose one company is higher than the other?

Answer 1

Answers : -

1. The price of the product depends on the products and the cost price to Walmart vary on different items. For example, the toothbrush would cost less and have less profit compared to the clothes or food products which may give 50% profit. So, if the item is food products which Walmart sells for 100 may have cost price of around 55-60.

The other company is d'mart whose profit margin is 4.87 for 2018. Which means they make on an average $6- $7 in transaction. The Walmart is bigger than d'mart as d'mart have less Branches and profit margin is also less where as Walmart has been in business for more than d'mart.