FINANCIAL ANALYSIS OF SEARS VS. WAL-MART

FINANCIAL ANALYSIS OF SEARS VS. WAL-MART Table Content Background Analysis------------------------------------------------ 3 Financial Ratio analysis--------------------------------------------- 4 Weighted Average Cost of Capital (WACC)--------------------- 12 Working Capital Management--------------------------------------20 Dividend Policy and Tax Treatment------------------------------- 23 Conclusion------------------------------------------------------------24 Background Analysis Wal-Mart Wal-Mart Stores, Inc., incorporated in 1969, is an international retailer. In the United States, the Company operated 1,568 discount stores, 1,258 Super centers, 525 SAM's CLUBs and 49 Neighborhood Markets as of January 31, 2003. Wal-Mart's greatest advantage is having great bargaining power with suppliers to get the lowest price …

…our simple financial analysis, we can't say which company is better. Wal-Mart and Sears all can get good profit every year. But Wal-Mart's stock price is too high now, their stock price has almost got the lever of some high-technology company, we think it should be too high. Sears' stock price is only half of Wal-Mart and it paid higher dividends than Wal-Mart. So we think Sears should be a better selection from investment position.