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Net sales Cost of goods sold Selling and administrative expenses Interest expense Other Income Income taxes Net Income Target

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Answer #1

a) Working capital= Current assets-Current liabilities

Target= $20160-12000= $8160

Wal-Mart= $47520-54000= $-6480

b) Current ratio= Current assets/Current liabilities

Target= $20160/12000= 1.68:1

Wal-Mart= $47520/54000= 0.88:1

c) Debt to assets ratio= Total liabilities/Total assets

Target= ($12000+21712)*100/48160= 70%

Wal-Mart= ($54000+55538)*100/168520= 65%

d) Free cash flow= Net cash provided by operating activities-Capital expenditures-Dividend

Target= $5000-3200-490= $1310

Wal-Mart= $23000-12200-3500= $7300

e) Earning per share= (Net income-Preferred dividend)/Weighted average common shares outstanding

Target= ($2041-0)/650= $3.14

Wal-Mart= ($15080-0)/2900= $5.20

f) Which company has better liquidity? Target company

Target company has better current ratio as compared to Wal-Mart that means Target company can pay off its current liabilities more easily than Wal-Mart comapny.

Which company has better solvency? Wal-Mart company

Wal-Mart company debt to assets ratio is less than the Target company that means Wal-Mart company has borrowed less than Target company.

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