Question

Financial Statement Case 4-1

This case, based on the balance sheet of Target Corporation, will familiarize you with some of the assets and liabilities of that company. Use the Target Corporation balance sheet to answer the following questions.

Requirements

1.Which balance sheet format does Target use?

2.Name the company’s largest current asset and largest current liability at January 30, 2016.

3.Compute Target’s current ratios at January 30, 2016, and January 31, 2015. Did the current ratio improve, worsen, or hold steady?

4.Under what category does Target report furniture, fixtures, and equipment?

5.What was the cost of the company’s property, plant, and equipment at January 30, 2016? What was the amount of accumulated depreciation? What was the book value of the property, plant, and equipment?

Answer 1

1.Target Corporation uses a mix of formats in its Balance sheet

Comparative $ amounts for two consecutive years are arranged in a vertically classified groupings of various accounts .

ie. Their balance sheet shows 2 consecutive years' financial position as at the end date of the fiscal period.

The group narrations are arranged vertically , classified as current assets, long-term assets, current liabilities, long-term liabilities, and the shareholders' equity

Each grouping may consist of one or more individual ledger accounts.

Assets are presented in decreasing order of liquidity.

2.Name the company’s largest current asset and largest current liability at January 30, 2016.

Largest current asset as at Jan 30, 2016-----Inventory--$ 8601 millions

Largest current liability as at Jan 30, 2016-----Accounts payable ---$ 7418 millions

3.Target’s current ratios at January 30, 2016, and January 31, 2015.

Current Ratio=Current assets/Current Liabilities

	2016	2015
Fig. in mlns
Current assets	14130	13624
Current liabilities	12622	11736
Current ratio	1.12	1.16

Did the current ratio improve, worsen, or hold steady?

It worsened marginally from 1.16 in fiscal 2015 to 1.12 in Fiscal 2016

4.Under what category does Target report furniture, fixtures, and equipment?

Under Property and equipment on the assets side of the Balance sheet

Cost of the company’s property, plant, and equipment at January 30, 2016	41463
Accumulated depreciation	16246
Book value of the property, plant, and equipment	25217