Problem 18-5A Selected financial data of Target Corporation and Wal-Mart Stores,
ID: 2489085 • Letter: P
Question
Problem 18-5A
Selected financial data of Target Corporation and Wal-Mart Stores, Inc. for a recent year are presented here (in millions).
Target
Corporation
Wal-Mart
Stores, Inc.
Income Statement Data for Year
Balance Sheet Data (End of Year)
Beginning-of-Year Balances
Other Data
(a)
For each company, compute the following ratios. (Use 365 days for calculation. Round all answers to 1 decimal place, e.g. 1.6, or 1.6%.)
Ratio
Target
Wal-Mart
Target
Corporation
Wal-Mart
Stores, Inc.
Income Statement Data for Year
Net sales $61,471 $374,526 Cost of goods sold 41,895 286,515 Selling and administrative expenses 16,200 70,847 Interest expense 647 1,798 Other income (expense) 1,896 4,273 Income tax expense 1,776 6,908 Net income $ 2,849 $ 12,731Balance Sheet Data (End of Year)
Current assets $18,906 $ 47,585 Noncurrent assets 25,654 115,929 Total assets $44,560 $163,514 Current liabilities $11,782 $ 58,454 Long-term debt 17,471 40,452 Total stockholders’ equity 15,307 64,608 Total liabilities and stockholders’ equity $44,560 $163,514Beginning-of-Year Balances
Total assets $37,349 $151,587 Total stockholders’ equity 15,633 61,573 Current liabilities 11,117 52,148 Total liabilities 21,716 90,014Other Data
Average net accounts receivable $ 7,124 $ 3,247 Average inventory 6,517 34,433 Net cash provided by operating activities 4,125 20,354Explanation / Answer
Ratio Formula Target Wal-Mart a b c d e f= Ratio % or times g h i= Ratio % or times Profit margin = (Net Income/ Net Sales) x 100 $ 2,849 $ 61,471 4.63 % $ 12,731 $ 374,526 3.40 % Asset turnover = Net Sales/Average Assets $ 61,471 $ 40,955 1.50 times $ 374,526 $ 157,551 2.38 times Return on assets = (Net Income /Average Assets) x 100 $ 2,849 $ 40,955 6.96 % $ 12,731 $ 157,551 8.08 % Return on common stockholders’ equity = (Net Income / Av. Common Stockholers' equity) x 100 $ 2,849 $ 15,470 18.42 % $ 12,731 $ 63,091 20.18 % Debt to assets = (Total Debts / Total Assets) x 100 $ 29,253 $ 44,560 0.66 % $ 98,906 $ 163,514 60.49 % Times interest earned = EBIT/Interest Expenses $ 5,272 $ 647 8.15 times $ 21,437 $ 1,798 11.92 times