Problem 13-5A Suppose selected financial data of Target and Wal-Mart for 2017 ar
ID: 2408196 • Letter: P
Question
Problem 13-5A
Suppose selected financial data of Target and Wal-Mart for 2017 are presented here (in millions).
Target
Corporation
Wal-Mart
Stores, Inc.
Income Statement Data for Year
$66,700
$418,000
45,000
309,000
15,200
78,000
740
1,900
(95
)
(420
)
1,400
6,700
$ 4,265
$ 21,980
Balance Sheet Data
(End of Year)
$18,000
$45,000
25,600
120,000
$43,600
$165,000
$11,000
$56,000
17,200
44,000
15,400
65,000
$43,600
$165,000
Beginning-of-Year Balances
$45,000
$163,000
13,400
65,000
10,600
58,000
31,600
98,000
Other Data
$7,500
$3,900
7,000
32,800
5,800
26,900
1,700
11,800
450
4,400
(a) For each company, compute the following ratios. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.)
Target
Wal-Mart
Target
Corporation
Wal-Mart
Stores, Inc.
Income Statement Data for Year
Net sales$66,700
$418,000
Cost of goods sold45,000
309,000
Selling and administrative expenses15,200
78,000
Interest expense740
1,900
Other income (expense)(95
)
(420
)
Income tax expense1,400
6,700
Net income$ 4,265
$ 21,980
Balance Sheet Data
(End of Year)
$18,000
$45,000
Noncurrent assets25,600
120,000
Total assets$43,600
$165,000
Current liabilities$11,000
$56,000
Long-term debt17,200
44,000
Total stockholders’ equity15,400
65,000
Total liabilities and stockholders’ equity$43,600
$165,000
Beginning-of-Year Balances
Total assets$45,000
$163,000
Total stockholders’ equity13,400
65,000
Current liabilities10,600
58,000
Total liabilities31,600
98,000
Other Data
Average net accounts receivable$7,500
$3,900
Average inventory7,000
32,800
Net cash provided by operating activities5,800
26,900
Capital expenditures1,700
11,800
Dividends450
4,400
Explanation / Answer
Target Walmart 1 Current ratio = Current assets / current Liabilities Current assets 18000 45000 Current liabilities 11000 56000 Current ratio 1.64 0.80 2 Accounts receivable turnover = net credit sales / average accounts receivable Net sales 66700 418000 Average accounts receivable 7500 3900 Accounts receivable turnover 8.89 107.18 times 3 Days sales uncollected = 365 / accounts receivable tunover Days sales uncollected 41.04 3.41 Days 4 Inventory turnover = Net sales / average inventory Cost of goods sold 45000 309000 Average merchandise inventory 7000 32800 Inventory turnover 6.43 9.42 times 5 Days sale in inventory = 365 / inventory turnover Days sales in inventory 56.78 38.74 Days 6 Profit margin = net income / net sales Net income 4265 21980 Net sales 66700 418000 Profit margin 6.4% 5.3% Assets turnover ratio = Net sales / average total assets Net sales 66700 418000 Beginning total assets 45000 163000 Ending total assets 43600 165000 Average total assets 44300 164000 Assets turnover ratio 1.51 2.55 times Return on assets = net income / total assets Net income 4265 21980 Total assets 45000 163000 Return on assets 9.5% 13.5% Return on commonstockholders equity = net income / total stockholders equity Net income 4265 21980 Average stockholders equity 14400 65000 Return on stockholders equity 29.6% 33.8% Debt to equity = total debt/ total Shareholders equity Total debt 28200 100000 Total shareholders equity 15400 65000 Debt to equity 1.83 1.54 Times interest charged = EBIT / interest expense EBIT = net income + income tax + interest expense Interest expense 740 1900 EBIT 6500 31000 Times interest charged 8.8 16.3 times