| 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 (Credit Sales) | $67,390 | $405,046 | |
| Cost of goods sold | 45,725 | 304,657 |
| Selling and administrative expenses | 13,469 | 79,607 |
| Interest expense | 757 | 1,884 |
| Other income (expense) | (2,944) | 2,576 |
| Income tax expense | 1,575 | 7,139 |
| Net income | $2,920 | $14,335 |
| |
| | | Balance Sheet Data (End of Year) | |
| Current assets | $17,213 | $ 48,331 | |
| Noncurrent assets | 26,492 | 122,375 |
| Total assets | $43,705 | $170,706 |
| Current liabilities | $10,070 | $ 55,561 |
| Long-term debt | 18,148 | 44,396 |
| Total stockholders' equity | 15,487 | 70,749 |
| Total liabilities and stockholders' equity | $43,705 | $170,706 |
| |
| | | Beginning-of-Year Balances | |
| Total assets | $44,533 | $163,429 | |
| Total stockholders' equity | 15,347 | 65,285 |
| Current liabilities | 11,327 | 55,390 |
| Total liabilities | 29,186 | 98,144 |
| | | |
| | Other Data |
| Average net receivables | $6,560 | $4,025 |
| Average inventory | 7,388 | 33,836 |
| Net cash provided by operating activities | 5,271 | 26,249 |
| |
| Instructions: (Expect slight differences than printed solutions manual due to significant digits in calcuations. |
| (a)(1) Compute the current ratio for each company. |
| |
| Target Current ratio | current asset | = | 17,213 | = | 1.7 | to 1 |
| current liability | 10,070 |
| |
| Wal-Mart Current ratio | current asset | = | Amount | = | Formula | to 1 |
| current liability | Amount |
| |
| (a)(2) Compute the receivables turnover for each company. |
| |
| Target Receivables turnover | Credit sales | = | Amount | = | Formula | |
| Average net receivable | Amount |
| |
| Wal-Mart Receivables turnover | Credit sales | = | Amount | = | Formula | |
| Average net receivable | Amount |
| |
| (a)(3) Compute the average collection period for each company. |
| |
| Target Average collection period | 365 days | = | Number | = | Formula | |
| Receivables turnover | Amount |
| |
| Wal-Mart Average collection period | 365 days | = | Number | = | Formula | |
| Receivables turnover | Amount |
| |
| (a)(4) Compute the inventory turnover for each company. |
| |
| Target Inventory turnover | Cost of goods sold | = | Amount | = | Formula | |
| Average inventory | Amount |
| |
| Wal-Mart Inventory turnover | Cost of goods sold | = | Amount | = | Formula | |
| Average inventory | Amount |
| |
| (a)(5) Compute the days in inventory for each company. |
| |
| Target Days in inventory | 365 days | = | Number | = | Formula | |
| Inventory turnover | Amount |
| |
| Wal-Mart Days in inventory | 365 days | = | Number | = | Formula | |
| Inventory turnover | Amount |
| |
| (a)(6) Compute the profit margin for each company. |
| |
| Target Profit margin | Net income | | Amount | = | Formula | |
| Net sales | Amount |
| |
| Wal-Mart Profit margin | Net income | | Amount | = | Formula | |
| Net sales | Amount |
| |
| (a)(7) Compute the asset turnover ratio for each company. |
| |
| Target Asset turnover | Net sales | = | Amount | = | Formula | |
| Average assets | Amount |
| |
| Wal-Mart Asset turnover | Net sales | = | Amount | = | Formula | |
| Average assets | Amount |
| |
| (a)(8) Compute the return on assets ratio for each company. |
| |
| Target Return on assets | Net income | = | Amount | = | Formula | |
| Average assets | Amount |
| |
| Wal-Mart Return on assets | Net income | = | Amount | = | Formula | |
| Average assets | Amount |
| |
| (a)(9) Compute the Debt to total assets ratio for each company. |
| |
| Target Debt to total assets | Total debt | = | Amount | = | Formula | |
| Total assets | Amount |
| |
| Wal-Mart Debt to total assets | Total debt | = | Amount | = | Formula | |
| Total assets | Amount |
| |
| |
| (b)(1) Compare the liquidity of the two companies. |
| Enter text answer here. |
| |
| (b)(2) Compare the profitability of the two companies. |
| Enter text answer here. |
| |
| (b)(3) Compare the solvency of the two companies. |
| Enter text answer here. |
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