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.)

Answer 1

Answer:

Target Corporation :

Current ratio   = Current assets / Current liabilities                              = $ 18,424 / $ 11,327 Current ratio = 1.63

Wal - Mart Stores :

Current ratio   = Current assets / Current liabilities                              = $ 48,331 / $ 55,561 Current ratio   = 0.87

Target Corporation :

Debt to assets ratio =   Total liabilities / Total assets                                          =    ( $ 11,327 + $ 17,859 ) / $ 44,533                                          =     $ 29,186 / $ 44,533                                         =     66 %

Wal - Mart Stores :

Debt to assets ratio =   Total liabilities / Total assets                                          =    ( $ 55,561 + $ 44,089 ) / $ 170,706                                          =     $ 99,650 / $ 170,706                                         =     58 %