Question
In: Accounting
Suppose selected financial data of Target and Wal-Mart for 2020 are presented here (in millions). Target...
Suppose selected financial data of Target and Wal-Mart for 2020 are presented here (in millions).
| Target Corporation | Wal-Mart Stores, Inc. | |
|---|---|---|
| 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 |
| 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 |
(b) Compare the liquidity, solvency, and profitability of the two companies.
Solutions
Expert Solution
| Ans. 1 | Current ratio = Total current assets / Total current liabilities | |||
| Target | $18,424 / $11,327 | 1.63 : 1 | ||
| Wal - mart | $48,331 / $55,561 | 0.87 : 1 | ||
| Ans. 2 | Accounts receivable turnover ratio = Net sales / Average accounts receivable | |||
| Target | $65,357 / $7,525 | 8.7 | times | |
| Wal - mart | $408,214 / $4,025 | 101.4 | times | |
| Ans. 3 | Average collection period = No. of days in year / Net credit sales * Average accounts receivables | |||
| Target | 365 / $65,357 * $7,525 | 42.0 | days | |
| Wal - mart | 365 / $408,214 * $4,025 | 3.6 | days | |
| Ans. 4 | Inventory turnover = Cost of goods sold / Average inventory | |||
| Target | $45,583 / $6,942 | 6.6 | times | |
| Wal - mart | $304,657 / $33,836 | 9.0 | times | |
| Ans. 5 | Days in inventory = No. of days in year / Cost of goods sold * Average inventory | |||
| Target | 365 / $45,583 * $6,942 | 55.6 | days | |
| Wal - mart | 365 / $304,657 * $33,836 | 40.5 | days | |
| Ans. 6 | Profit margin = Net income / Net sales * 100 | |||
| Target | $2,488 / $65,357 *100 | 3.8% | ||
| Wal - mart | $14,335 / $408,214 * 100 | 3.5% | ||
| Ans. 7 | Asset turnover = Net sales / Average assets | |||
| Target | $65,357 / $44,319.50 | 1.5 | times | |
| Wal - mart | $408,214 / $167,067.50 | 2.4 | times | |
| *Average assets = (Beginning assets + Ending assets) / 2 | ||||
| Target | ($44,106 + $44,533) / 2 | $44,319.50 | ||
| Wal - mart | ($163,429 + $170,706) / 2 | $167,067.50 | ||
| Ans. 8 | Return on assets = Net income / Average assets * 100 | |||
| Target | $2,488 / $44,319.50 *100 | 5.6% | ||
| Walmart | $14,335 / $167,067.50 * 100 | 8.6% | ||
| Ans. 9 | Return on Common stockholder's equity = Net income / Average Common stockholder's equity * 100 | |||
| Target | $2,488 / $14,529.50 *100 | 17.1% | ||
| Walmart | $14,335 / $68,369 * 100 | 21.0% | ||
| * Average Stockholder's equity = (Beginning equity + Ending equity) / 2 | ||||
| Target | ($13,712 + $15,347) / 2 | $14,529.50 | ||
| Walmart | ($65,682 + $71,056) / 2 | $68,369.00 | ||
| Ans.10 | Debt to assets ratio = Total liabilities / Total assets * 100 | |||
| Target | $29,186 / $44,533 * 100 | 66% | ||
| Walmart | $99,650 / $170,706 * 100 | 58% | ||
| *Total liabilities = Current liabilities + Long term debt | ||||
| Target | Walmart | |||
| Current liabilities | $11,327 | $55,561 | ||
| Long term debt | $17,859 | $44,089 | ||
| Total liabilities | $29,186 | $99,650 | ||
| Ans. 11 | Time interest earned = Income before interest and taxes / Interest expenses | |||
| Target | $4,673 / $707 | 6.6 | times | |
| Walmart | $23,950 / $2,065 | 11.6 | times | |
| *Calculation of income before interest and taxes: | ||||
| Target | Walmart | |||
| Net sales | $65,357 | $408,214 | ||
| Cost of goods sold | ($45,583) | ($304,657) | ||
| Selling & administrative expenses | ($15,101) | ($79,607) | ||
| Income before interest and taxes | $4,673 | $23,950 | ||
| Ans. 12 | Free cash flow = Net cash provided by operating activities - Capital expenditures - Dividends | |||
| Target | $5,881 - $1,729 - $496 | $3,656 | million | |
| Walmart | $26,249 - $12,184 - $4,217 | $9,848 | million | |
ekkarill92 answered 2 years agoRelated Solutions
Suppose selected financial data of Target and Wal-Mart for 2020 are presented here (in millions). Target...
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
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$48,331
Noncurrent assets
26,109
122,375
Total assets
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$170,706
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Suppose selected financial data of Target and Wal-Mart for 2020 are presented here (in millions). Target...
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...
Suppose selected financial data of Target and Wal-Mart for 2020 are presented here (in millions). Target...
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
$408,214
Cost of goods sold
45,583
304,657
Selling and administrative expenses
15,101
79,607
Interest expense
707
2,065
Other income (expense)
(94)
(411)
Income tax expense
1,384
7,139
Net income
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$ 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
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Wal-Mart for 2017 are presented here (in
millions).
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Wal-Mart
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300,000
Selling and administrative expenses
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Noncurrent assets
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120,000
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Suppose selected financial data of Target and Wal-Mart for 2017 are presented here (in millions). Target...
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Wal-Mart for 2017 are presented here (in
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Suppose selected financial data of Target and Wal-Mart for 2017 are presented here (in millions).
Suppose selected financial data of Target and Wal-Mart for 2017 are presented here (in millions). Income Statement Data for Year
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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
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$65,600
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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
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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
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$67,000
$413,000
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44,000
301,000
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(410
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