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) 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 $66,096 45,996 15,320 710 $412,014 303,156 75,813 2,039 (82 ) (419) 1,305 $ 2,683 6,671 $ 23,916 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 $18,840 27,332 $46,172 $10,849 17,116 18,207 $46,172 $49,766 122,650 $172,416 $54,794 44,568 73,054 $172,416

Explanation / Answer

Particulars Formula Target Walmart Current Ratio Current Assets / Current Libailities 1.74 0.91 Account receivable turnover Net sales / Average receivables 8.83 104.97 Avg collection period (365 x Average receivables) / Credit sales 41.33 3.48 Inventory turnover COGS / Avg inventory or Sales / Avg Inventory 6.63 9.05 Days inventory (Avg Inventory / COGS) x 365 55.04 40.32 Profit margin (Net income / Net sales) x 100 4.06% 5.80% Asset turnover Net sales / Average assets 1.47 2.45 Return on assets (Net income / Average assets) x 100 5.99% 14.24% Return on common stockholders equity (Net income / Shareholders equity) x 100 14.74% 32.74% Debt to asset ratio (Short term debt + Long term debt) / Total assets 0.37 0.26 Times interest earned EBIT / Total interest 6.62 16.00 Current cash debt coverage Net cash from operating activities / Avg current liabilities 0.52 0.48 Cash debt coverage Operating cash flow / total debt 0.32 0.59 Free cash flow Operating cash flow - Capital expenditure 3804 14420

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