From the course: Corporate Financial Statement Analysis

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Compare Walmart and Target’s common-size statements

Compare Walmart and Target’s common-size statements

From the course: Corporate Financial Statement Analysis

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Compare Walmart and Target’s common-size statements

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So we've used common-size financial statements to analyze uncertain company, that hypothetical example. But will this same technique work with a real company? A real company like Walmart. Let's look at Walmart's income statement. Now you see the income statement here in front of you. This is good. We have three years worth of data, and you can see that sales are going up each year, about $30 billion a year and increase. Awesome. Three years of side-by-side data are nice, but it would be really nice to know why income is so much higher in 2025. And this is the year ended January 31st, 2025. We're going to get huge insights very efficiently just by constructing a common size income statement for Walmart. And how do we do that again? Just divide everything in the income statement by sales for that year. And we see down at the bottom in 2025, net income as a percentage of sales, 2.9%. Now we've seen that number before, we call it return on sales. In 2024, that same number is 2.4%. Why is…

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