Question

serelleu lidl Illal Udd UI LWU LUunipeliLUIS, Idi gel dilu val dll, dle presenteurere. All Ullal s dle IUIIS.) Suppuse lile udld Wereldkeri UIT Lile 2022 financial statements of each company. Target (1/31/22) Wal-Mart (1/31/22) Income Statement Data for Year Net sales $64,000 $405,000 Cost of goods sold 41,600 291,600 Selling and administrative expenses 16,000 72,900 Interest expense 640 4,050 Other income 20 4,150 Income taxes 2,023 14,210 Net income $3,757 $ 26,390 Target Wal-Mart Balance Sheet Data (End of Year) Current assets $22,560 $ 39,900 Noncurrent assets 30,000 116,000 Total assets $52,560 $155,900 Current liabilities $12,000 $ 57,000 Long-term liabilities 22,164 33,422

Answer 1

			TARGET	WAI-MART
a)	WORKING CAPITAL		10,560.00	-        17,100.00
	WORKING CAPITAL=CURRENTS ASSETS-CURRENT LIABILITIES
	WORKING CAPITAL		22560-12000	39900-57000
			10,560.00	-        17,100.00
B)	CURRENT RATIO		1.88	0.70
	CURRENT RATIO=CURRENT ASSETS/CURRENT LIABILITIES
			22560/12000	39900/57000
			1.88	0.70
C)	DEBT-ASSET RATIO		1.54	1.72
	DEBT-ASSET RATIO=TOTAL DEBT/TOTAL ASSETS
	TOTAL DEBT=LONG TERM DEBT+SHORT TERM DEBT
			12000+22164	57000+33422
			34,164.00	90,422.00
	TOTAL ASSETS		52,560.00	155,900.00
	DEBT-ASSET RATIO		52560/34164	155900/90422
			1.54	1.72
D)	FREE CASH FLOW		2,000.00	13,000.00
	FREE CASH FLOW=CASH FLOW FROM OPERATING ACTIVITY-CAPITAL EXPENDITURE
			5200-3200	24300-11300
			2,000.00	13,000.00
E)	EARNINGS PER SHARE		4.42	5.80
	EARNINGS PER SHARE=NET INCOME/WEIGHTED AVERAGE SHARES OUTSTANDING
			3757/850	26390/4550
			4.42	5.80
F)	WHICH COMPANY HAS BETTER LIQUIDITY ?
	TARGET HAS MORE LIQUIDITY THAN WAI MART BECAUSE ITS CURRENT RATIO IS NEARER TO 2.
	WHICH COMPANY HAS BETTER SOLVENCY?
		NET INCOME/TOTAL DEBT*100
			3757/34164	26390/90422
			11.00	29.19
	WAL MART HAS MORE SOLVENCY THAN TARGET