Question

In: Accounting

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). 


Suppose selected financial data of Target and Wal-Mart for 2017 are presented here (in millions). Income Statement Data for Y

                   Income Statement Data for Year                           Net sales            $6,900     $417,000   cost ot goods sold           44,000     38,000  Selling and administratv  epenses            14400    3,000  Interest expens      7500     1800  Qther income (expense)                       (95]    (400)  Income tax expense  1,500   6,600  Net income         $6,155  $21,200                     Balance Sheet Data                       (End of Year)  Crrent assets      $17,00  $45,000  lncurrent asset    26800   120,000  Total assets       $43.800 $165,000  current liabilites $10,000  $56,000  long-term debt     17,300   44,000  Total stockholders equty         16,500      65,000 Total liabilities and stockholders equity                     $438000   $165,000                   Bginnin-of-Year Balanses *otal assets        $43000  $165,000 "otal stockholders equty         13400      64,000 kurrent liabilites  10,00    56,000 a ilabiltes         29,80    101,000                        Other Data Average net accounts receivable     $7500        $3,900 Average inventory             7,200     32,800 Net cash provided by operating activities 5500     25900


(a) For each company, compute the following ratios. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.) 

(a) For each company, compute the following ratios. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.) Ratio Target


Solutions

Expert Solution

Target and Walmart (in millions)

Formula Target Walmart
1 current ratio current assets / current liabilities

17,000/10,000

= 1.70:1

45,000/56,000

= 0.80:1

2 Accounts receivable turnover Turnover / Average accounts receivable

66,900/7,500

= 8.92 times

417,000/3,900

= 106.92 times

3 Average collection period 365/ Accounts receivable turnover

365/8.92

= 40.92 days

365/106.92

= 3.41 days

4 Inventory turnover Cost of goods sold/ Average Inventory

44,000/7,200

= 6.11 times

308,000/32,800

= 9.39 times

5 Days in inventory 365/ inventory turnover

365/6.11

= 59.74 days

365/9.39

= 38.87 days

6 Profit margin income/ turnover

6,155/66,900

= 9.20%

21,200/417,000

= 5.08%

7 Assets turnover turnover/ Average total assets

66,900/((43,800+43,000)/2)

66,900/43,400

= 1.54 times

417,000/((165,000+165,000)/2)

417,000/165,000

= 2.53 times

8 Return on assets Net income/ Average total assets

6,155/43,400

= 14.18%

21,200/165,000

= 12.85%

9 Return on common shareholders equity Net income/ Average common shareholders equity

6,155/((16,500+13,400)/2)

6,155/14,950

= 41.17%

21,200/((65,000+64,000)/2)

21,200/64,500

= 32.87%

10 Debt to assets Total debt/ total assets

(10,000+17,300)/43,800

= 62.33%

(56,000+44,000)/165,000

= 60.61%

11 Times interest ratio EBIT / Interest

(66,900-44,000-14,400-95)/750

8,405/750 = 11.21

(417,000-308,000-79,000-400)/1,800

= 29,600/1,800 = 16.44

12 Free cash flows Operating cash flow - Change in working capital

= 5,500 - ((17,000-10,000)-((43,000-26,800)-10,000)

= 5,500 - (7,000-6,200)

= 5,500 - 800

= 4,700

= 25,900 - ((45,000-56,000) - ((165,000-120,000)-56,000)

= 25,900


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