Summary
This article revolves around Wal-Mart’s and its sales revenue. Wal-Mart Stores Inc. managed to maintain an unchanged income during the harsh economic recession. Compared to the Wall Street analysis, Wal-Mart actually did better than expected. Wal-Mart maintained its revenue through a process of cost cutting in both its inventory and expenses. Adjustments were made in the store layout to persuade the consumers away from its rivals. They lowered the shelves to broaden the view of the store from the entrance and installed better lightings and wider aisles. In addition, Wal-Mart added more brands and extended its electronics offerings. Wal-Mart is planning to spend around $1.6-$1.7billion dollars to redo up to 600 stores to persuade the new customers.
Connection
As stated in Chapter 11 of Accounting 12, an excess inventory slows down the inventory cycle, takes up room, and reduces the amount of cash flow in the business. Wal-Mart discovers this problem and immediately made adjustments to its inventory. This increased the amount of cash flow in the business for better investments and also increases the storage space in the business. As a result of better inventory management and cost-cutting, Wal-Mart was able to improve its profit margins and reduced the revenue loss in an economic recession. As you can see, an excess inventory can be a burden for a company’s financial health.
Reflection
Once again Wal-Mart showed its ability to maintain a healthy business. Wal-Mart did what they were supposed to do to prevent the business from further revenue loss. Although the cost cutting was not specifically explained, we can assume from its previous reputations. Wal-Mart has the reputation of treating its employees poorly and applying pressure on its suppliers to lower the price. They probably lay off many of its employees just like all the other businesses during the recession. Another perspective of laying off employees is that it will continue to worsen the recession and reducing the consumers spending in the long run.
http://abcnews.go.com/US/WireStory?id=8317384&page=1
http://abcnews.go.com/US/WireStory?id=8317384&page=2
