Suppose selected financial data of Target and Wal-Mart for 2017 are presented he
ID: 2592031 • Letter: S
Question
Suppose selected financial data of Target and Wal-Mart for 2017 are presented here (in millions).
Target
Corporation
Wal-Mart
Stores, Inc.
Income Statement Data for Year
$66,800
$406,000
45,000
305,000
14,400
78,000
690
2,000
(75
)
(420
)
1,300
6,900
$ 5,335
$ 13,680
Balance Sheet Data
(End of Year)
$19,000
$48,000
27,300
121,000
$46,300
$169,000
$12,000
$55,000
17,500
44,000
16,800
70,000
$46,300
$169,000
Beginning-of-Year Balances
$45,000
$164,000
13,800
66,000
10,800
57,000
31,200
98,000
Other Data
$8,000
$4,100
7,100
34,000
6,000
25,800
1,800
11,500
450
3,700
(a) For each company, compute the following ratios. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.)
Target
Wal-Mart
Target
Corporation
Wal-Mart
Stores, Inc.
Income Statement Data for Year
Net sales$66,800
$406,000
Cost of goods sold45,000
305,000
Selling and administrative expenses14,400
78,000
Interest expense690
2,000
Other income (expense)(75
)
(420
)
Income tax expense1,300
6,900
Net income$ 5,335
$ 13,680
Balance Sheet Data
(End of Year)
$19,000
$48,000
Noncurrent assets27,300
121,000
Total assets$46,300
$169,000
Current liabilities$12,000
$55,000
Long-term debt17,500
44,000
Total stockholders’ equity16,800
70,000
Total liabilities and stockholders’ equity$46,300
$169,000
Beginning-of-Year Balances
Total assets$45,000
$164,000
Total stockholders’ equity13,800
66,000
Current liabilities10,800
57,000
Total liabilities31,200
98,000
Other Data
Average net accounts receivable$8,000
$4,100
Average inventory7,100
34,000
Net cash provided by operating activities6,000
25,800
Capital expenditures1,800
11,500
Dividends450
3,700
Explanation / Answer
Average total assets for Target = (46,300+45,000)/2 = 45,650
Average total assets for Wal-Mart = (169,000+164,000)/2 = 166,500
Average equity for Target = (16,800+13,800)/2 = 15,300
Average equity for Wal-Mart = (70,000+66,000)/2 = 68,000
Ratio Target Wal-mart (1) Current ratio (Current assets/Current liabilities) 1.58 : 1 (19,000/12,000) 0.87 : 1 (48,000/55,000) (2) Accounts receivable turnover (Sales/Average accounts receivable) 8.35 times (66,800/8,000) 99.02 times (406,000/4,100) (3) Average collection period (365/Accounts receivable turnover) 43.71 days (365/8.35) 3.69 days (365/99.02) (4) Inventory turnover (Cost of goods sold/Average inventory) 6.34 times (45,000/7,100) 8.97 times (305,000/34,000) (5) Days in Inventory (365/Inventory turnover) 57.57 days (365/6.34) 40.69 days (365/8.97) (6) Profit margin (Net income/Net sales) 7.99% (5,335/66,800) 3.37%(13,680/406,000) (7) Asset turnover (Sales/Average total assets) 1.46 times (66,800/45,650) 2.44 times (406,000/166,500) (8) Return on assets (Net income/Average total assets) (*) 11.69% (5,335/45,650) 8.22% (13,680/166,500) (9) Return on common stockholder's equity (Net income/Average equity) (*) 34.87% (5,335/15,300) 20.12% (13,680/68,000) (10) Debt to assets ratio [(Current liabilities +long term debt)/Assets)] 63.71% [(12,000+17,500)/46,300] 58.58% [(55,000+44,000)/169,000] (11) Times interest earned [(Net income+Interest expense+Income tax expense)/Interest expense)] 10.62 times [(5,335+690+1,300)/690] 11.29 times [(13,680+2,000+6,900)/2,000] (12) Free cash flow (Net cash provided by operating activities - Capital expenditures) 4,200 (6,000-1,800) 14,300 (25,800-11,500)Related Questions
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