Solution-Walmart integrative case, It is common practice

Walmart integrative case

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Reference no: EM133075884

Walmart Integrative Case

It is common practice for retail outlets to lease their store locations and distribution centers. Walmart is no exception. Note 11 to Walmart's consolidated financial statements for the fiscal year ending January 31, 2016 (found online at the text website or available for download in the investor relations section of Walmart's website), provides information on future operating lease commitments.

Required:

Effectively capitalize the operating lease obligations. You must first choose and justify an interest rate. Assume that all cash flows occur at the end of each year and assume 10 periods for the 'Thereafter' period. You will need to indicate the Present value factor and the present value for each of the period(s) examined. One suggestion for the interest rate would be to divide the interest expense for the fiscal year ending January 31, 2016, by the average of the January 31, 2016, and January 31, 2015, interest-bearing debt.
Re-compute the long-term debt to long-term capital ratio using your capitalized operating leases.
Based on your results in (B) discuss what insights you have obtained regarding the financial position and risk of Walmart

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Walmart integrative case

Reference no: EM133075884

Reference no: EM133075884

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