Suppose selected financial data of Target and Wal-Mart for 2014 are presented he

Question

Suppose selected financial data of Target and Wal-Mart for 2014 are presented here (in millions).

Problem 13-5A Suppose selected financial data of Target and Wal-Mart for 2014 are presented here (in millions) Target Corporation Wal-Mart Stores, Inc. Income Statement Data for Year Net sales Cost of goods sold Selling and administrative expenses Interest expense Other income (expense) Income tax expense Net income $65,719 44,343 14,726 690 $407,974 304,513 76,609 2,126 (94 ) (383) 1,409 $4,457 6,881 $17,462 Balance Sheet Data End of Year Current assets Noncurrent assets Total assets Current liabilities Long-term debt Total stockholders' equity Total liabilities and stockholders equity $17,809 26,378 $44,187 $11,712 17,966 14,509 $44,187 $46,545 120,214 $166,759 $54,445 43,715 68,599 $166,759

Explanation / Answer

1) Current ratio = Current assets / current liabilities

Target inc = 17809 / 11712 = 1.52

Wal-mart stores, inc = 46545 / 54445 = 0.85

2) Account receivable turnover = credit sales / average Account receivable

Target inc = 65719 / 7572 = 8.68

Wal-mart stores, inc = 407974 / 3918 = 104 .13

3) Average collection period = Days * AR / credit sales

Target inc =   = 365 * 7572 / 65719 = 42

Wal-mart stores, inc = 365 * 3918 / 407974 = 3

4)Inventory turnover = COOGS / Average inventory

Target inc = 44343 / 7194= 6.16

Wal-mart stores, inc = 304513 / 34208 = 8.90

5) Days in inventory = Days * Inventory / COGS

Target inc = 365 *7194 / 44343 = 59.21

Wal-mart stores, inc = 365 * 34208 / 304513 = 41

6) Profit margin = profit / net sales * 100

Target inc = 4457 / 65719 *100 = 6.78

Wal-mart stores, inc = 17462 / 407974 * 100 = 4.28

7) Asset turnover = turnover/ net assets

Target inc = 65719 / 43549 = 1.51

Wal-mart stores, inc = 407974 / 164749 = 2.48

8) Return on asset = EBIT / Net assets

Target inc = 6556 / 43549 = .15

Wal-mart stores, inc = 26469 / 164749 = .16

9) Return on common stockholder equity = Net income/ share holder's equity

Target inc = 6556/ 14509 = 0.45

Wal-mart stores, inc = 26469 / 68599 = 0.38

10) Debt to asset ratio =Debt / (equity+ retained earnings)

Target inc = 17966 / 14509 = 1.24

Wal-mart stores, inc = 46545 / 68599 = .68

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