Question

Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 3, 2018, are available here (https://corporate.target.com/annual-reports/2017/10-K/10-k-cover). This material is also available under the Investor Relations link at the company’s website (www.target.com).

Required:

1. By what name does Target label its balance sheet?

2. What amounts did Target report for the following items on February 3, 2018?

3. What was Target’s largest current asset? What was its largest current liability?

4. Compute Target’s current ratio and debt to equity ratio in 2018? (Round your answers to 2 decimal places. Enter your answers in millions, not in dollars (i.e., 10,00,000 should be entered as 10).)

1.	Target's label name for its balance sheet.
2.	a.	Current assets
	b.	Long-term assets
	c.	Total assets
	d.	Current liabilities
	e.	Long-term liabilities
	f.	Total liabilities
	g.	Total shareholders’ equity
3.	a.	Largest current asset
	b.	Largest current liability
4.	a.	Current ratio
	b.	Debt to equity ratio

5. Assuming Target’s industry had an average current ratio of 1.0 and an average debt to equity ratio of 2.5, comment on Target’s liquidity and long-term solvency.

Answer 1

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Target Corporation

Answer 1

By what name does Target label its balance sheet?

Consolidated Statements of Financial Position

Answer 2	$ Millions
Long-term assets	26,435.00
Total assets	38,999.00
Current liabilities	13,201.00
Long-term liabilities	14,089.00
Total liabilities	27,290.00
Total shareholders’ equity	11,709.00

Answer 3
Largest current asset	Inventory $ 8,657 millions.
Largest current liability	Accounts payable $ 8,677 millions.

Answer 4
Current ratio	0.95
Debt to equity ratio	2.33

Answer 5

Average current ratio of industry is 1.0 but Target's current ratio is 0.93. So its liquidity is worse than industry.

Average Debt to equity ratio of industry is 2.50 but Target's Debt to equity ratio is 2.33. So its long-term solvency is better than industry.