Your answer is partially correct. Selected financial data of Target and Wal-Mart
ID: 2560938 • Letter: Y
Question
Your answer is partially correct. Selected financial data of Target and Wal-Mart for a recent year 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 expense:s Interest expense Other income (expense) Income tax expense Net income $61,471 41,895 16,200 647 1,896 ,776 $2,849 $374,5266 286,515 70,847 1,798 4,273 6,908 $ 12,731 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 $18,906 25,654 $44,560 $11,782 17,471 15,307 $44,560 $ 47,585 115,929 $163,514 $58,454 40,452 64,608 $163,514 Beginning-of-Year Balances Total assets Total stockholders' equity Current liabilities Total liabilities $37,349 15,633 11,117 21,716 $151,58.7 61,573 52,148 90,014 Other Data Average net accounts receivable Average inventory Net cash provided by operating activities $ 7,124 6,517 4,125 $ 3,247 34,433 20,354Explanation / Answer
Solution:
Target
Wal-mart
(5) Days in Inventory
Number of Days in a year (assumed 365) (A)
365
365
Inventory Turnover Ratio (Calculated in part 4) (B)
6.4
8.3
Days in Inventory (A / B)
57
44
Number of Days in a year (Assumed 360)
Days in Inventory
56.3
(360 / 6.4)
43.4
(360/ 8.3)
(8) Return on Assets
Net Income
$2,849.00
$12,731.00
Average Total Assets
$40,954.50
(44560+37349)/2
$157,550.50
(163514+151587)/2
Return on Assets (Net Income / Avg Total Assets x 100)
7.0%
8.1%
(9) Return on Common Stockholders Equity
Net Income
$2,849.00
$12,731.00
Average Stockholders Equity
$15,470.00
(15307+15633)/2
$63,090.50
(64608+61573)/2
Return on Common Stockholders Equity (Net Income / Avg Stockholders equity x 100)
18.42%
20.18%
10) Debt To Assets Ratio
Total Debt (Year End Balance)
29253
98906
Total Assets (Year end balance)
44560
163514
Debt TO Asset (Total Debt / Total Assets)
0.7
0.6
11) Times Interest Earned Ratio
Income before interest and taxes
5272
(2849+1776+647)
21437
(12731+6908+1798)
Interest Expense
647
1798
Times Interest Earned Ratio (Income before interest and taxes / Interest Expense)
8.1
11.9
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Target
Wal-mart
(5) Days in Inventory
Number of Days in a year (assumed 365) (A)
365
365
Inventory Turnover Ratio (Calculated in part 4) (B)
6.4
8.3
Days in Inventory (A / B)
57
44
Number of Days in a year (Assumed 360)
Days in Inventory
56.3
(360 / 6.4)
43.4
(360/ 8.3)
(8) Return on Assets
Net Income
$2,849.00
$12,731.00
Average Total Assets
$40,954.50
(44560+37349)/2
$157,550.50
(163514+151587)/2
Return on Assets (Net Income / Avg Total Assets x 100)
7.0%
8.1%
(9) Return on Common Stockholders Equity
Net Income
$2,849.00
$12,731.00
Average Stockholders Equity
$15,470.00
(15307+15633)/2
$63,090.50
(64608+61573)/2
Return on Common Stockholders Equity (Net Income / Avg Stockholders equity x 100)
18.42%
20.18%
10) Debt To Assets Ratio
Total Debt (Year End Balance)
29253
98906
Total Assets (Year end balance)
44560
163514
Debt TO Asset (Total Debt / Total Assets)
0.7
0.6
11) Times Interest Earned Ratio
Income before interest and taxes
5272
(2849+1776+647)
21437
(12731+6908+1798)
Interest Expense
647
1798
Times Interest Earned Ratio (Income before interest and taxes / Interest Expense)
8.1
11.9
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