Problem 13-5A Suppose selected financial data of Target and Wal-Mart for 2017 ar
ID: 2536296 • 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
$65,900
$409,000
45,000
303,000
15,100
76,000
650
2,100
(95
)
(400
)
1,300
6,700
$ 3,755
$ 20,800
Balance Sheet Data
(End of Year)
$16,000
$49,000
25,700
123,000
$41,700
$172,000
$11,000
$56,000
17,300
45,000
13,400
71,000
$41,700
$172,000
Beginning-of-Year Balances
$45,000
$163,000
12,500
66,000
10,000
58,000
32,500
97,000
Other Data
$7,700
$3,800
7,200
33,600
5,600
26,200
1,700
11,500
460
3,900
(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$65,900
$409,000
Cost of goods sold45,000
303,000
Selling and administrative expenses15,100
76,000
Interest expense650
2,100
Other income (expense)(95
)
(400
)
Income tax expense1,300
6,700
Net income$ 3,755
$ 20,800
Balance Sheet Data
(End of Year)
$16,000
$49,000
Noncurrent assets25,700
123,000
Total assets$41,700
$172,000
Current liabilities$11,000
$56,000
Long-term debt17,300
45,000
Total stockholders’ equity13,400
71,000
Total liabilities and stockholders’ equity$41,700
$172,000
Beginning-of-Year Balances
Total assets$45,000
$163,000
Total stockholders’ equity12,500
66,000
Current liabilities10,000
58,000
Total liabilities32,500
97,000
Other Data
Average net accounts receivable$7,700
$3,800
Average inventory7,200
33,600
Net cash provided by operating activities5,600
26,200
Capital expenditures1,700
11,500
Dividends460
3,900
Explanation / Answer
Solution:
(1) Current ratio= Total Current assets / Total Current liabilities
Target
Wal-Mart
Current ratio
= $16,000 / $ 10,000
= $49,000 / $ 58,000
=1.6: 1
= 0.84 :1
(2) Accounts receivable turnover= Net Sales / Average Accounts receivable
Target
Wal-Mart
Accounts receivable turnover
= $65,900 / $7,700
= $409,000 / $3,800
=8.56 Times
= 107.63 Times
(3) Average collection period= 365 / Accounts receivable turnover
Target
Wal-Mart
Average collection period
= 365 / 8.56
= 365 / 107.63
=42.64 days
= 3.39 days
(4) Inventory turnover = Cost of goods sold / Average inventory
Target
Wal-Mart
Inventory turnover
= $45,000 / $7,200
= $303,000 / $33,600
=6.25 Times
= 9.02 Times
As per answering guidelines, I am submitting answer for first four parts. For rest of the answers , submit questions separtely.
Target
Wal-Mart
Current ratio
= $16,000 / $ 10,000
= $49,000 / $ 58,000
=1.6: 1
= 0.84 :1