Walmart 2013 Annual Report Download - page 23

Management’s Discussion and Analysis of Financial
Condition and Results of Operations
Walmart 2013 Annual Report || 21
The calculation of ROI, along with a reconciliation to the calculation of ROA, the most comparable GAAP  nancial measure, is as follows:
Fiscal Years Ended January 31,
(Amounts in millions) 2013 2012
CALCULATION OF RETURN ON INVESTMENT
Numerator
Operating income $ 27,801 $ 26,558
+ Interest income 187 162
+ Depreciation and amortization 8,501 8,130
+ Rent 2,602 2,394
= Adjusted operating income $ 39,091 $ 37,244
Denominator
Average total assets of continuing operations
(1)
$198,193 $186,984
+ Average accumulated depreciation and amortization
(1)
51,829 47,613
- Average accounts payable
(1)
37,344 35,142
- Average accrued liabilities
(1)
18,478 18,428
+ Rent x 8 20,816 19,152
= Average invested capital $215,016 $200,179
Return on investment (ROI) 18.2% 18.6%
CALCULATION OF RETURN ON ASSETS
Numerator
Income from continuing operations $ 17,756 $ 16,454
Denominator
Average total assets of continuing operations
(1)
$198,193 $186,984
Return on assets (ROA) 9.0% 8.8%
As of January 31,
2013 2012 2011
Certain Balance Sheet data
Total assets of continuing operations
(2)
$203,068 $193,317 $180,651
Accumulated depreciation and amortization 55,043 48,614 46,611
Accounts payable 38,080 36,608 33,676
Accrued liabilities
(3)
18,802 18,154 18,701
(1) The average is based on the addition of the account balance at the end of the current period to the account balance at the end of the prior period and dividing by 2.
(2) Total assets of continuing operations as of January 31, 2013, 2012 and 2011 exclude assets of discontinued operations of $37 million, $89 million and $131 million, respectively,
which are recorded in prepaid expenses and other in the Company’s Consolidated Balance Sheets.
(3) Accrued liabilities as of January 31, 2013, 2012 and 2011 exclude liabilities of discontinued operations of $6 million, $26 million and $47 million, respectively, which are included
in accrued liabilities in the Company’s Consolidated Balance Sheets.
ROI is considered a non-GAAP  nancial measure. We consider return on
assets (“ROA”) to be the  nancial measure computed in accordance with
generally accepted accounting principles (“GAAP”) that is the most
directly comparable  nancial measure to ROI as we calculate that  nancial
measure. ROI di ers from ROA (which is income from continuing
operations for the  scal year divided by average total assets of continuing
operations for the period) because ROI: adjusts operating income to
exclude certain expense items and adds interest income; adjusts total
assets from continuing operations for the impact of accumulated
depreciation and amortization, accounts payable and accrued liabilities;
and incorporates a factor of rent to arrive at total invested capital.
Although ROI is a standard  nancial metric, numerous methods exist for
calculating a company’s ROI. As a result, the method used by manage-
ment to calculate our ROI may di er from the methods other companies
use to calculate their ROI. We urge you to understand the methods used
by other companies to calculate their ROI before comparing our ROI to
that of such other companies.