Captial Valuation Models

Running head: WAL-MART Wal-Mart Name: University: Course: Tutor: Date: Wal-Mart Wal-Mart has been on of the companies which have consistently grown over the years. In fact many financial analysts define it as one of the top businesses which have had a financial health in the current times. The success behind Wal-Mart is its ability to sell its goods at the cheapest prices in all the regions where its stores are located. This has attracted many customers who would wish to save on their expenditure as they get the same commodities that they need fro their daily use. This paper analyses the value of Wal-Mart in terms of its equity and debt values using three models which are: Using the Capital Asset Pricing Model (“CAPM”), the weighted average cost of capital (“WACC”) and the Build-Up Method (Yahoo Finance, 2010). Debt ratio is calculated by dividing the total debt of a business by its assets. The total debt of Wal-Mart this by the end of 2009 fiscal year was 40452 and the total assets was 64608. By calculation its debt ratio would be 0.63 or 63%. This was an improvement relative to the previous year which was 58%. This means that the assets of Wal-Mart were more than its debts and this has consistently increased over the years. On the other hand, the liabilities by the year ending 31st October, 2009, were valued at $ 104,936,000 while the total assets were valued at $ 172,934,000. Using these figures, the share holders’ equity, which is calculated as the excess of the assets over the liabilities, was $ 67,998,000 (Yahoo Finance, 2010). This equity has made Wal-Mart to attract even more customers and share holders with its shares in the stock market consis...