Chapter 3 Homework
You are considering an investment in the common stock of Target(Ticker: TGT). Calculate the missing ratios (Current Ratio, DebtRatio, and Profit Margin). Discuss the company’s strengths andweakness in the areas of liquidity, asset management, debtmanagement and profitability relative to the competitor, WalmartInc. (Ticker: WMT). Summarized Financial Data and Ratios fromHoovers.
Target: 2017 Annual Balance Sheet (InMillions)
Total Current Assets | $Â Â 11,990 | Â Â | Total Current Liabilities | $ 12,708 |
Net Fixed Assets | Â Â Â 25,441 | | Long-term Debt | 13,770 |
| | | Shareholder’s (Common) Equity |    10,953 |
Total Assets | $ 37,431 | | Total Liabilities and Equity | $ 37,431 |
Target: 2017 Income Statement (In Millions)
Sales | $ 69,495 |
Cost of Goods Sold | Â Â 48,872 |
    Gross Profit | 20,623 |
Other Expenses | ÂÂÂ Â Â Â 16,590 |
    Earnings Before Taxes | 4,033 |
Taxes | Â Â Â Â Â Â Â 1,296Â Â Â |
    Net Income | $  2,737 |
                  Â
Ratio | Target 2017 | | Walmart 2017 |
Current Ratio | ? | | 0.81 |
Quick Ratio | 0.29 | | 0.22 |
Inventory Turnover | 6.73 | | 9.90 |
Account Receivable Turnover | 92.78 | | 88.32 |
Total Asset Turnover | 1.86 | | 1.73 |
Debt Ratio | ? | | 60.87% |
Times Interest Earned | 6.70 | | 9.93 |
Profit Margin | ? | | 3.60% |
Return on Assets | 7.31% | | 5.50% |
Return on Equity | 24.99% | | 14.88% |
