Target Corporation Wal-Mart Stores, Inc. Income Statement Data for Year Net sale

Question

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 $66,700 46,000 14,700 650 $409,000 306,000 76,000 1,800 (95) (420) 1,400 7,200 3,855 $17,580 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 $19,000 25,600 $44,600 $10,000 18,200 16,400 $44,600 S48,000 120,000 $168,000 S55,000 44,000 69,000 $168,000 Total assets Total stockholders' equity Current liabilities Total liabilities Beginning-of-Year Balances $162,000 66,000 55,000 96,000 $43,000 13,500 10,500 29,500 Other Data $7,800 7,000 5,600 1,800 460 $3,900 33,700 26,800 12,400 4,500 Average net accounts receivable Average inventory Net cash provided by operating activities Capital expenditures Dividends

Explanation / Answer

Accounts receivable turnover = Net credit sales/average accounts receivable

*Assume all sales are credit sales.

66700/65300* = 1.02 times

*43000+44600/2=65300

409000/246000* = 1.66 times

*162000+168000/2=246000

3855/65300* = 5.90%

*43000+44600/2=65300

17580/246000* = 7.15%

*162000+168000/2=246000

3855/23150* = 16.65%

*13500+16400/2=23150

17580/102000* = 17.24%

*66000+69000/2=102000

5905*/650 = 9.08 times

*3855+650+1400=5905

26580*/1800 = 14.77 times

*17580+1800+7200=26580

Ratios target Wal mart 1 Current Ratio = Current Asset/Current Liablities 19000/10000 = 1.9 times 48000/55000 = 0.87 times 2

Accounts receivable turnover = Net credit sales/average accounts receivable

*Assume all sales are credit sales.

66700/7800 = 8.55 times 409000/3900 = 104.87 times 3 Average collection period = 365days/Accounts receivable turnover 365/8.55 = 42.68days 365/104.87 = 3.48days 4 Inventory Turnover = Cost of goods sold/average Inventory 46000/7000 = 6.57 times 306000/33700 = 9.08 times 5 Days in Inventory = 365/Inventory Turnover 365/6.57 = 55.54days 365/9.08 = 40.20days 6 Profit Magin = Net Income/Net sales 3855/66700 = 5.78% 17580/409000 = 4.30% 7 Asset turnover = Net Sales/Average Total Asset

66700/65300* = 1.02 times

*43000+44600/2=65300

409000/246000* = 1.66 times

*162000+168000/2=246000

8 Return on Asset = Net Income/Average total Asset

3855/65300* = 5.90%

*43000+44600/2=65300

17580/246000* = 7.15%

*162000+168000/2=246000

9 Return on equity = Net income/shareholder’s equity

3855/23150* = 16.65%

*13500+16400/2=23150

17580/102000* = 17.24%

*66000+69000/2=102000

10 Debt to asset ratio = Total Liablities/Total Asset 10000/19000 = 52.63% 55000/48000 = 114.58% 11 Times interest earned = EBIT/Interest expense

5905*/650 = 9.08 times

*3855+650+1400=5905

26580*/1800 = 14.77 times

*17580+1800+7200=26580

12 Free Cash flow = operating cash flow-capital expenditure 5600-1800 =3800 26800-12400 = 14400

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