In: Accounting
Following are the financial statements of Target Corporation from its FY2015 annual report.
Target Corporation | ||||
---|---|---|---|---|
Consolidated Statements of Operations | ||||
12 Months Ended | ||||
$millions | Jan. 30, 2016 | Jan. 31, 2015 | Feb. 01, 2014 | |
Sales | 76,785 | 72,618 | 71,279 | |
Cost of sales | 54,133 | 51,278 | 50,039 | |
Gross margin | 22,652 | 21,340 | 21,240 | |
Selling, general and administrative expenses | 15,280 | 14,676 | 14,465 | |
Depreciation and amortization | 2,213 | 2,129 | 1,996 | |
Gain on sale | (620) | - | (319) | |
Earnings from continuing operations before interest expense & income taxes | 5,779 | 4,535 | 5,170 | |
Net interest expense | 607 | 882 | 1,049 | |
Earnings from continuing operations before income taxes | 5,172 | 3,653 | 4,121 | |
Provision for income taxes | 1,681 | 1,204 | 1,427 | |
Net earnings from continuing operations | 3,491 | 2,449 | 2,694 | |
Discontinued operations, net of tax | 42 | (4,085) | (723) | |
Net earnings (loss) | 3,533 | (1,636) | 1,971 |
Target Corporation | |||
---|---|---|---|
Consolidated Statements of Financial Position | |||
$millions | Jan. 30, 2016 | Jan. 31, 2015 | |
Assets | |||
Cash and cash equivalents, inc. short-term investments of $3,008 and $1,520 | $4,046 | $2,210 | |
Inventory | 8,601 | 8,282 | |
Assets of discontinued operations | 322 | 1,058 | |
Other current assets | 1,161 | 2,074 | |
Total current assets | 14,130 | 13,624 | |
Property and equipment, net | 25,817 | 25,952 | |
Noncurrent assets of discontinued operations | 75 | 717 | |
Other noncurrent assets | 840 | 879 | |
Total assets | $40,862 | $41,172 | |
Liabilities and Shareholders' investment | |||
Accounts payable | $7,418 | $7,759 | |
Accrued expenses and other current liabilities | 4,236 | 3,783 | |
Current portion of LT debt and other borrowings | 815 | 91 | |
Liabilities of discontinued operations | 153 | 103 | |
Total current liabilities | 12,622 | 11,736 | |
Long-term debt and other borrowings | 11,945 | 12,634 | |
Deferred income taxes | 823 | 1,160 | |
Noncurrent liabilities of discontinued operations | 18 | 193 | |
Other noncurrent liabilities | 1,897 | 1,452 | |
Total noncurrent liabilities | 14,683 | 15,439 | |
Shareholders' investment | |||
Common stock | 50 | 53 | |
Additional paid-in-capital | 5,348 | 4,899 | |
Retained earnings | 8,788 | 9,644 | |
Accumulated other comprehensive loss | |||
Pension and other benefit liabilities | (588) | (561) | |
Currency translation adjustment and cash flow hedges | (41) | (38) | |
Total shareholders' investment | 13,557 | 13,997 | |
Total liabilities and shareholders' investment | $40,862 | $41,172 |
We forecast Target's income statement using the following forecast assumptions for both years:
Sales (growth rate) | 10% |
Cost of sales/Sales | 70.5% |
Selling, general and administrative expenses/Sales | 19.9% |
Depreciation and amortization (% of prior year PPE, net) | 8.4% |
Net interest expense | No change |
Provisions for income taxes/Pretax income | 32.5% |
Assume Target disposes of the net assets from discontinued operations (assets less liabilities) in FY2016 for proceeds of $350 million. |
Instructions: Forecast Target's fiscal year ended 2016 and 2017 income statements.
Hint: Forecasted FY2016 gain on sale is computed as proceeds from the disposal of net assets from discontinued operations minus net assets from discontinued operations ($350 million - $226 million). Forecast $0 for gain on sale in FY2017.
Target Corporation | |||
---|---|---|---|
Consolidated Statements of Operations | |||
$ millions | FY2016 Est. | FY2017 Est. | |
Sales | $Answer
Mark 0.00 out of 1.00 |
$Answer
Mark 0.00 out of 1.00 |
|
Cost of sales | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Gross margin | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Selling, general and administrative expenses | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Depreciation and amortization | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Gain on sale | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 1.00 out of 1.00 |
|
Earnings from continuing operations before interest and tax | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Net interest expense | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Earnings from continuing operations before tax | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Provisions for income taxes | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Net earnings | $Answer
Mark 0.00 out of 1.00 |
$Answer
Mark 0.00 out of 1.00 |
We forecast Target's financials using the following forecast assumptions for both year:
Inventory/Sales | 11.7% |
Other current assets/Sales | 1.6% |
Other noncurrent assets/Sales | 1.1% |
Accounts payable/Sales | 10.1% |
Accrued and other current liabilities/Sales | 5.7% |
Deferred income taxes/Sales | 1.1% |
Other noncurrent liabilities/Sales | 2.6% |
CAPEX/Sales | 1.90% |
Dividends/Net income | 40.5% |
Common stock | No change |
Additional paid-in capital | No change |
Accumulated other comprehensive loss | No change |
Current Maturities L-T Debt for 2016 | $751 |
Current Maturities L-T Debt for 2017 | $2,251 |
Current Maturities L-T Debt for 2018 | $201 |
Assume Target buys back common stock at $2,000 million in FY2016 and retires the stock. (Hint: Retained earnings are reduced by the cost of the stock buy back.) No stock buybacks happen in FY2017. |
Instructions: Forecast Target's fiscal year ended 2016 and 2017 balance sheets.
Target Corporation | |||
---|---|---|---|
Consolidated Statements of Financial Position | |||
$ millions | FY2016 Est. | FY2017 Est. | |
Assets | |||
Cash and cash equivalents, inc. short-term investments | $Answer
Mark 0.00 out of 1.00 |
$Answer
Mark 0.00 out of 1.00 |
|
Inventory | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Other current assets | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Total current assets | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Property and equipment, net | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Other noncurrent assets | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Total assets | $Answer
Mark 0.00 out of 1.00 |
$Answer
Mark 0.00 out of 1.00 |
|
Liabilities and Shareholders' investment | |||
Accounts payable | $Answer
Mark 0.00 out of 1.00 |
$Answer
Mark 0.00 out of 1.00 |
|
Accrued expenses and other current liabilities | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Current portion of LT debt and other borrowings | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Total current liabilities | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Long-term debt and other borrowings | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Deferred income taxes | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Other noncurrent liabilities | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Total noncurrent liabilities | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Shareholders' investment | |||
Common stock | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Additional paid-in capital | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Retained earnings | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Accumulated other comprehensive loss | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Total shareholders' investment | Answer
Mark 0.00 out of 1.00 |
Answer
Mark 0.00 out of 1.00 |
|
Total liabilities and shareholders' investment | $Answer
Mark 0.00 out of 1.00 |
$Answer
Mark 0.00 out of 1.00 |