How to Make Economic Decisions

How to Make Economic Decisions
Jill R. Edwards
University of Phoenix
Intermediate Financial Accounting II
Malcolm Veazie
December 20, 2010

How to Make Economic Decisions
Wal-Mart is the publically held company selected to use as the basis for this paper.   Wal-Mart is one of the world’s largest retailers.   Wal-Mart has over 3,000 stores in the United States and nearly 1,300 operations internationally.   Wal-Mart has also been at the top of the Fortune 500 list of America’s largest corporation ranked by sales for four years in a row.   The details of this paper will examine the disclosures associated to cash and cash equivalents, receivables, and inventory for Wal-Mart. It will also identify the components of cash and cash equivalents.  
Cash and cash equivalents
Cash and cash equivalents consist of coins, currency, checking accounts, petty cash, checks received but not currently deposited, savings accounts, and short-term investments to name a few. The amount a company has in cash and cash equivalents are shown on the balance sheet labeled total current assets. A company reports several items on the financial statement.   The current asset portion of the balance sheet is the source of the company’s accessible funds and crucial to the company’s operation.   To an investor, cash and cash equivalents assist in discovering how stable a company is and if the company is competent enough to cover all the company’s liabilities. An investor performs a comparison from prior years to current, to determine if the company is financially healthy.   According to Wal-Mart’s balance sheet the company reports the total for cash and cash equivalents for January 31, 2010 as $48,331.10 (this value is stated in millions).   This amount consists of cash and short-term investments, total receivables, total inventory, prepaid expenses, and other assets.   From January 31, 2006 to January 31, 2010 Wal-Mart has experienced an increase in the company’s cash and cash...