[16:58]
The reason why I picked these companies is because Walmart is really a pure-play, offline
retailer. Yes, they do have some online sales, but it's 90%-plus offline still. Amazon.com is also a
retailer, but it's online. It is getting more into physical locations. It does have more of that, but
it started off mostly being an online retailer and it's still largely an online retailer.
And then, Salesforce is on the opposite end of the spectrum, because it doesn't sell physical
products. It does have plants, property, and equipment, buildings, and computers, servers,
equipment, things like that. But it doesn't have inventory. It doesn't have to order inventory
and then sell it to customers. So in that sense, it is a very different business from both Amazon
and Walmart. So I wanted to compare and contrast all these and show you a little bit about
what free cash flow means for all of these companies.
[17:55]
With Walmart, we can see that its free cash flow here has been jumping around a little bit. It
has declined and then grown and then it declined again, and you see that reflected in its growth
rate. You see that its capital expenditures, as a percent of cash flow from operations and
revenue, haven't really been changing by all that much. So it seems like something else is
responsible for its free cash flow jumping around here.
Now if you look at its working capital over here, you can see that the change in working capital
as a percent of the change in revenue, which is one of the key percentages you look, has been
somewhat inconsistent. It's always negative. So as the company grows, it needs to spend on
working capital. It's mostly because, of course, they need to buy a lot of inventory up front. So
they need to front the cash and then they can finally sell the products and recognize the
revenue. This is very common for a retailer, so this is nothing new.
[18:54]
What does stand out, though, is that all their other items, accounts payable and accrued
liabilities, and accrued taxes: the signs in all of these have been changing a lot and the
magnitude of these has been changing a lot. Where something like accounts receivable is
staying a little bit steadier over time.
So our overall conclusion here would be that, yes, their revenue is going up. Their cash flow
from operations is a little bit spottier. It's going up, but then it's decreasing, and then free cash
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