For this project my company is Target, and I need help with these questions. The

Question

For this project my company is Target, and I need help with these questions. The link to their annual report and financial statements is below!

http://www.pepsico.com/docs/album/annual-reports/pepsico-inc-2016-annual-report.pdf

instructions:

Locate the most recent annual report of a Fortune 500 company. Edgar or the company’s website are good sources for the report. I recommend a company that sells a product. Avoid banks, insurance companies, utilities, etc.

Email me the financial statements including the appropriate footnotes, and the auditors’ report. I do not want the full report. Make sure the source of all of your answers are included in your email.

Answer the following questions, give the page number(s) that is (are) the source of your answer in the report. You do not need to retype the question, but number your answer appropriately.

Some questions require a written response. Make sure your answer is complete and properly constructed.

Show your work.

Questions:

1. What is the current ratio for this year and last? If the average current ratio for both years for the stocks listed on the New York Stock Exchange was 1.5, what information does this provide a potential creditor?

2. What are the components of your company's current assets?

3. Calculate the company’s debt to equity ratio for this year and last. Assume the average ratio for listed companies is 1.0. As a current stockholder, what information does this ratio provide you?

4. List any contingent liabilities disclosed in the footnotes of your company’s annual report. Briefly describe the nature of each contingency.

5.Did your company report any other comprehensive income items (OCI) and what was their nature (source)?

6.What is the current balance sheet status (asset or liability) of your company’s deferred income tax and the amount?

7. List the components of your company's pension expense for the current year

8. List the types of stocks used by your company and the number of shares outstanding of each type.

9. Does your company hold any Treasury Stock? Where there any changes in the amount of Treasury Stock? What caused the changes?

10.List the transactions this year that imoacted(caused a change in) the retained earnings.

11.List and briefly describe any share – based compensation utilized by your company.

12.What were the reported basic and diluted earnings per share reported by your company for this year and last? What information do these items provide an investor?

13.What was the company’s largest source and use of cash from both investing and financing activities this year?

14.Would you consider investing in this company? Why or why not?

Explanation / Answer

1. Please refer page 79 Consolidated balance sheet

Current ratio of more than 1 is considered healthy, Current ratio of 1.5 means for every 1$ current liability company has 1.5$ short term receivables. In Retail and consumer companies companies are able to better negotiate with vendors and get higher credit periods and could make sales with very less credit period which makes their current ratio low. In Pepsico case also accounts payable is high due to high credit period, and accounts receivable is low due to lower credit period being offered to customer, So we can say Pepsico is managing its working capital efficiently than the listed company.

2. Components of Current assets are as follows (Page 79)

Cash and cash equivalents 9,158

Short-term investments 6,967

Accounts and notes receivable, net 6,694

Inventories 2,723

Prepaid expenses and other current assets 1,547

3.

The higher the ratio the more leveraged company is, compared to average1.0 of listed company Pepsico is more leveraged.

5. Following OCI items were there (page 77)

Currency translation adjustment

Cash flow hedges:Reclassification of net losses to net income

Cash flow hedges:Net derivative losses

Pension and retiree medical: Reclassification of net losses to net income

Pension and retiree medical: Remeasurement of net liabilities and translation

Unrealized losses on securities

6. Deferred tax liability is there ( $ 5,073 million)

Particulars 2016 2015 Current assets (CA)          27,098          23,031 Current liabilities (CL)          21,135          17,578 Current ratio (CA/CL)              1.28              1.31

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