* Question 1 Suppose selected financial data of Target and Wal-Mart for 2019 are

Question

* Question 1 Suppose selected financial data of Target and Wal-Mart for 2019 are presented here in millions) Target Corporation Income Statement Data Wal-Mart Stores, Inc. for Year Net sales Cost of goods sold Selling and administrative expenses Interest expense Other income (expense) Income tax expense Net income $67,000$410,000 302,000 81,000 2,000 (390) 7,000 $17,610 44,000 14,300 700 (85) 1,400 $6,515 Balance Sheet Data (End of Year) $49,000 122,000 $44,500$171,000 $55,000 44,000 16. 30072,000 $44,500$171,000 $17,000 27.500 Current assets Noncurrent assets Total assets Current liabilities Long-term debt Total stockholders equity Total liabilities and stockholders" equity $10,000 18,200

Explanation / Answer

Answer 1. Current ratio = Current Assets / Current Liabilities Target   Wal-Mart Current Assets          17,000            49,000 Current Liabilities          10,000            55,000 Current Ratio 1.70 : 1 0.89 : 1 Answer 2. Accounts Receivable Turnover = Net Credit sales / Avg. Accounts Receivable Target   Wal-Mart Net Sales    67,000.00    410,000.00 Avg. Accounts Receivable      7,400.00        3,800.00 Accounts Receivable Turnover (in times)              9.05            107.89 Answer 3. Average Collection Period = 360 Days / Accounts Receivable Turnover Target   Wal-Mart Average Collection period (in days)            39.76                 3.34 Answer 4. Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory Target   Wal-Mart Cost of Goods Sold    44,000.00    302,000.00 Avg. Inventory      6,900.00      33,000.00 Inventory Turnover (in times)              6.38                 9.15 Answer 5. Days in Inventory = 360 Days / Inventory Turnover Ratio Target   Wal-Mart Average Collection period (in days)            56.45              39.34 Answer 6. Profit Margin = Net Income/ Sales Target   Wal-Mart Net Income      6,515.00      17,610.00 Sales    67,000.00    410,000.00 Profit Margin Ratio 9.72% 4.30% Answer 7. Assets Turnover = Net Sales / Average Total Assets Target   Wal-Mart Sales    67,000.00    410,000.00 Beg. Balance - Total Assets    43,000.00    164,000.00 End. Bal. - Total Assets    44,500.00    171,000.00 Avg. Total Assets    43,750.00    167,500.00 Assets Turnover (in times)              1.53                 2.45 Answer 8. Return on Assets = Net Income / Avg. Total Assets Target   Wal-Mart Net Income      6,515.00      17,610.00 Avg. Total Assets    43,750.00    167,500.00 Return on Assets 14.89% 10.51% Answer 9. Return on Common Stockholders' Equity = (Net Income - Preference Dividend) / Avg. Common Stockholders' Equity Target   Wal-Mart Net Income      6,515.00      17,610.00 Beginning Stockholders' Equity    13,200.00      64,000.00 Ending Stockholders' Equity    16,300.00      72,000.00 Avg. Stockholders' Equity    14,750.00      68,000.00 Return on Common Stockholders' Equity 44.17% 25.90% Answer 10. Debt to Assets Ratio = Total Debt / Total Assets Target   Wal-Mart Total Debt          28,200            99,000 Total assets          44,500          171,000 Debt to Assets Ratio (in times)              0.63                 0.58 Answer 12. Free Cash Flow = Net Cash Flow from Operating Activities - Capital Investments - Dividend Paid Target   Wal-Mart Net Cash Provided by operating Activities            6,000            27,300 Capital Expenditures            1,800            11,700 Dividend declared & paid                520              3,900 Free Cash Flow            3,680            11,700

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