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.

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.)

Solutions

Expert Solution

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 %

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