Question
In: Accounting
Selected hypothetical financial data of Target and Wal-Mart for 2022 are presented here (in millions). Compute...
Selected hypothetical financial data of Target and Wal-Mart for 2022 are presented here (in millions).
Compute selected ratios, and compare liquidity, profitability, and solvency for two companies.
| 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 | ||
Instructions
a. For each company, compute the following ratios.
- 1. Current ratio.
- 2. Accounts receivable turnover.
- 3. Average collection period.
- 4. Inventory turnover.
- 5. Days in inventory.
- 6. Profit margin.
- 7. Asset turnover.
- 8. Return on assets.
- 9. Return on common stockholders' equity.
- 10. Debt to assets ratio.
- 11. Times interest earned.
- 12. Free cash flow.
b. Compare the liquidity, solvency, and profitability of the two companies.
Solutions
Expert Solution
| Particular | Target Corporation |
Wal-Mart Stores, Inc. |
| Current ratio(Current assets÷current liabilities) | 1.63 | 0.87 |
| Accounts receivable turnover(net credit sales÷ Avg.debtors) | 8.68 | 101.42 |
| Average collection period(365÷Acc.recievable T/O ratio) | 42.1days | 3.6 days |
| Inventory turnover(net sales÷avg.inventory) | 9.41 | 12.06 |
| Days in inventory(365÷invt.T/O ratio) | 38.7 days | 30.3 days |
| Profit margin(net earnings÷sales) | 0.04 | 0.035 |
| Asset turnover(net sales÷net assets) | 1.47 | 2.40 |
| Return on assets(net income÷total assets) | 0.06 | 0.08 |
| Return on common stockholders equity (net income÷ stockholders equity) | 0.16 | 0.20 |
| Debt to assets ratio(total liabilities÷total assets) | 0.65 | 0.58 |
| Time interest earned ratio(Ebitda÷interest exp) | 6.48 | 11.39 |
| Free cash flow(net cash after investing exp.) | 4152 | 14065 |
When it comes to liquidity of the company target corporation is the best. But Walmart store has high range of liquid cash reserves.
When it comes to solvency of the company Walmart store is the best
When it comes to profitability of the company both the companies have a slight difference not much more.
*please let me know if you need any further information.
please don't forget to like my answer. Thank you.
ekkarill92 answered 2 years agoRelated Solutions
Selected hypothetical financial data of Target and Wal-Mart for 2022 are presented here (in millions). Target...
Selected hypothetical financial data of Target
and Wal-Mart for 2022 are presented here (in
millions).
Target
Corporation
Wal-Mart
Stores, Inc.
Income Statement Data for Year
Net sales
$65,600
$410,000
Cost of goods sold
44,000
308,000
Selling and administrative expenses
14,600
75,000
Interest expense
690
2,100
Other income (expense)
(90
)
(420
)
Income tax expense
1,400
7,300
Net income
$ 4,820
$ 17,180
Balance Sheet Data
(End of Year)
Current assets
$17,000
$48,000
Noncurrent assets
26,700
120,000
Total assets
$43,700...
Selected hypothetical financial data of Target and Wal-Mart for 2022 are presented here (in millions). Target...
Selected hypothetical financial data of Target and Wal-Mart for
2022 are presented here (in millions). Target Corporation Wal-Mart
Stores, Inc. Income Statement Data for Year Net sales $66,300
$411,000 Cost of goods sold 44,000 305,000 Selling and
administrative expenses 14,300 77,000 Interest expense 660 1,900
Other income (expense) (80 ) (420 ) Income tax expense 1,500 7,200
Net income $ 5,760 $ 19,480 Balance Sheet Data (End of Year)
Current assets $17,000 $48,000 Noncurrent assets 26,800 122,000
Total assets $43,800...
Selected hypothetical financial data of Target and Wal-Mart for 2022 are presented here (in millions). Target...
Selected hypothetical financial data of Target
and Wal-Mart for 2022 are presented here (in
millions).
Target
Corporation
Wal-Mart
Stores, Inc.
Income Statement Data for Year
Net sales
$67,000
$413,000
Cost of goods sold
44,000
301,000
Selling and administrative expenses
14,000
75,000
Interest expense
660
2,200
Other income (expense)
(70
)
(410
)
Income tax expense
1,400
7,000
Net income
$ 6,870
$ 27,390
Balance Sheet Data
(End of Year)
Current assets
$17,000
$49,000
Noncurrent assets
26,000
123,000
Total assets
$43,000...
Selected hypothetical financial data of Target and Wal-Mart for 2022 are presented here (in millions). Target...
Selected hypothetical financial data of Target and Wal-Mart for
2022 are presented here (in millions). Target Corporation Wal-Mart
Stores, Inc. Income Statement Data for Year Net sales $66,600
$407,000 Cost of goods sold 45,000 305,000 Selling and
administrative expenses 14,900 79,000 Interest expense 730 1,800
Other income (expense) (75 ) (390 ) Income tax expense 1,500 7,400
Net income $ 4,395 $ 13,410 Balance Sheet Data (End of Year)
Current assets $18,000 $50,000 Noncurrent assets 26,100 121,000
Total assets $44,100...
Selected hypothetical financial data of Target and Wal-Mart for 2022 are presented here (in millions). Please...
Selected hypothetical financial data of Target
and Wal-Mart for 2022 are presented here (in
millions). Please show how to do the equations. Thank you.
Target
Corporation
Wal-Mart
Stores, Inc.
Income Statement Data for Year
Net sales
$66,700
$409,000
Cost of goods sold
46,000
306,000
Selling and administrative expenses
14,700
76,000
Interest expense
650
1,800
Other income (expense)
(95
)
(420
)
Income tax expense
1,400
7,200
Net income
$ 3,855
$ 17,580
Balance Sheet Data
(End of Year)
Current assets...
Selected hypothetical financial data of Target and Wal-Mart for 2022 are presented here (in millions). Net...
Selected hypothetical financial data of Target and Wal-Mart for 2022 are presented here (in millions). Target Corporation Wal-Mart stores,Inc Income Statement Datafor Year
Net sales $67.000 $413,000
Cost of goods sold ...
Selected hypothetical financial data of Target and Wal-Mart for 2022 are presented here (in millions). Please...
Selected hypothetical financial data of Target
and Wal-Mart for 2022 are presented here (in
millions). Please show how to do the equations. Thank you.
Target
Corporation
Wal-Mart
Stores, Inc.
Income Statement Data for Year
Net sales
$66,700
$409,000
Cost of goods sold
46,000
306,000
Selling and administrative expenses
14,700
76,000
Interest expense
650
1,800
Other income (expense)
(95
)
(420
)
Income tax expense
1,400
7,200
Net income
$ 3,855
$ 17,580
Balance Sheet Data
(End of Year)
Current assets...
Selected hypothetical financial data of Targetand Wal-Mart for 2022 are presented here (inmillions).Target...
Selected hypothetical financial data of Targetand Wal-Mart for 2022 are presented here (in
millions).TargetCorporationWal-MartStores, Inc.Income Statement Data for YearNet sales$66,400$414,000Cost of goods sold45,000302,000Selling and administrative expenses15,50081,000Interest expense6501,900Other income (expense)(80)(400)Income tax expense1,4007,300Net income$ 3,770$ 21,400Balance Sheet Data(End of Year)Current assets$17,000$47,000Noncurrent assets26,700120,000Total assets$43,700$167,000Current liabilities$11,000$56,000Long-term debt16,80045,000Total stockholders’ equity15,90066,000Total liabilities and stockholders’ equity$43,700$167,000Beginning-of-Year BalancesTotal assets$45,000$164,000Total stockholders’ equity13,30064,000Current liabilities10,50058,000Total liabilities31,700100,000Other DataAverage net accounts receivable$7,500$3,900Average inventory7,00033,600Net cash provided by operating activities5,50027,400Capital expenditures1,80011,800Dividends5004,500For each company, compute the following ratios. (Round
current ratio answers to 2 decimal places,...
Selected hypothetical financial data of Targetand Wal-Mart for 2022 are presented here (inmillions).Target...
Selected hypothetical financial data of Target and Wal-Mart for 2022 are presented here (in millions).
TargetCorporation
Wal-MartStores, Inc.
Income Statement Data for Year
Net sales
$65,600
$410,000
Cost of goods sold
44,000
308,000
Selling and administrative expenses
14,600
75,000
Interest expense
690
2,100
Other income (expense)
(90
)
(420
)
Income tax expense
1,400
7,300
Net income
$ 4,820
$ 17,180
Balance Sheet Data(End of Year)
Current assets
$17,000
$48,000
Noncurrent assets
26,700
120,000
Total assets
$43,700
$168,000
Current liabilities
...
Selected hypothetical financial data of Targetand Wal-Mart for 2022 are presented here (inmillions).Target...
Selected hypothetical financial data of Target and Wal-Mart for 2022 are presented here (in millions).
TargetCorporation
Wal-MartStores, Inc.
Income Statement Data for Year
Net sales
$65,000
$406,000
Cost of goods sold
46,000
306,000
Selling and administrative expenses
14,800
76,000
Interest expense
660
2,200
Other income (expense)
(70
)
(390
)
Income tax...
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