Question

Suppose selected financial data of Target and Wal-Mart for 2020 are presented here (in millions).

		Target Corporation		Wal-Mart Stores, Inc.
		Income Statement Data for Year
Net sales		$65,357		$408,214
Cost of goods sold		45,583		304,657
Selling and administrative expenses		15,101		79,607
Interest expense		707		2,065
Other income (expense)		(94)		(411)
Income tax expense		1,384		7,139
Net income		$ 2,488		$ 14,335
		Balance Sheet Data (End of Year)
Current assets		$18,424		$48,331
Noncurrent assets		26,109		122,375
Total assets		$44,533		$170,706
Current liabilities		$11,327		$55,561
Long-term debt		17,859		44,089
Total stockholders’ equity		15,347		71,056
Total liabilities and stockholders’ equity		$44,533		$170,706
		Beginning-of-Year Balances
Total assets		$44,106		$163,429
Total stockholders’ equity		13,712		65,682
Current liabilities		10,512		55,390
Total liabilities		30,394		97,747
		Other Data
Average net accounts receivable		$7,525		$4,025
Average inventory		6,942		33,836
Net cash provided by operating activities		5,881		26,249
Capital expenditures		1,729		12,184
Dividends		496		4,217

(a)

For each company, compute the following ratios. (Enter free cash flow in millions. Round Current ratio to 2 decimal places, e.g. 1.67. Round Debt to assets ratio to 0 decimal places, e.g. 18 or 18%. Round all other answers to 1 decimal place, e.g. 1.6, or 1.6%. Use 365 days for calculation.)

		Ratio		Target				Wal-Mart
(1)		Current ratio				:1				:1
(2)		Accounts receivable turnover				times				times
(3)		Average collection period				days				days
(4)		Inventory turnover				times				times
(5)		Days in inventory				days				days
(6)		Profit margin				%				%
(7)		Asset turnover				times				times
(8)		Return on assets				%				%
(9)		Return on common stockholders’ equity				%				%
(10)		Debt to assets ratio				%				%
(11)		Times interest earned				times				times
(12)		Free cash flow		$		million		$		million

Answer 1

			Target Corp.	Wal Mart Stores
			Income Statement Data for Year
Net Sales			65,357	408,214
Cost of Goods Sold		45,583	304,657
Selling & Administrative Exp	15,101	79,607
Int Exp			707	2,065
Other Income ( Exp)		(94)	(411)
Income Tax Exp		1,384	7,139
Net Income		2,488	14,335
			Balance Sheet Data (End of Year)
Current Assets		18,424	48,331
Non Current Assets		26,109	122,375
Total Assets		44,533	170,706
Current Liabilities		11,327	55,561
Long Term Debt		17,859	44,089
Total Stock Holders Equity	15,347	71,056
Total Liabilities & Stock Holders Equity	44,533	170,706
			Beginning-of-Year Balances
Total Assets		44,106	163,429
Total Stock Holders Equity	13,712	65,682
Current Liabilities		10,512	55,390
Total Liabilities		30,394	97,747
			Other Data
Avg Net Account Receivable	7,525	4,025
Average Inventory		6,942	33,836
Net Cash Provided by Operating Activities	5,881	26,249
Capital Expenditure		1,729	12,184
Dividends		496	4,217
						Formula
Current Ratio		1.63 : 1.00	0.87 : 1.00	Current Assets/ Current Liabilities
Account Receivable Turnover	8.7	101.4		Net Sales / Average Account Receivable
Average Collection Period	42	4		Avg Net Account Receivable/ (Net Sales /365 )
Inventory Turnover		6.6	9.0		COGS / Average Inventory
Days in Inventory		56	41		Ending Inventory / (COGS /365 )
Profit Margin		3.8%	3.5%		Net Income / Net Sales
Assets Turnover		1.5	2.4		Net Sales / Average Total Assets
Return on Assets		5.6%	8.6%		Net Income / Average Total Assets
Return to Common Stock Holders Equity	17.1%	21.0%		Net Income / Average Total Stock Holders Equity
Debt To Assets Ratio	67%	59%		Avg Total Liabilities / Avg Total Assets
Times Interest Earned	6.5	11.4		Earnings before Interest & Taxes / Interest Expense
Free Cash Flow		4,152	14,065		Net Cash Provided by Operating Activities - Capital Expenditures