Selected financial data of two competitors, Target and Wal-Mart, are presented here. (All dollars are in millions.) Suppose the data were taken from the 2022 financial statements of each company.
Target Wal-Mart
(1/31/22) (1/31/22)
Income Statement Data for
Year
Net sales $65,000 $421,000
Cost of goods sold 45,500 319,960
Selling and administrative expenses 16,250 88,410
Interest expense 650 4,210
Other income 20 4,300
Income taxes 917 4,452
Net income $1,703 $8,268
Balance Sheet Data (End of
Year)
Current assets $19,680 $46,980
Noncurrent assets 33,000 122,000
Total assets $52,680 $168,980
Current liabilities $12,000 $ 54,000
Long-term liabilities 24,876 47,388
Total stockholders' equity 15,804 67,592
Total liabilities and stockholders' equity $52,680 $168,980
Net cash provided by operating activities $4,600 $23,000
Cash paid for capital expenditures $3,400 $11,700
Dividends declared and paid on common stock $530 $3,500
Weighted-average common shares outstanding (millions) 650 2,650
For each company, compute these values and ratios. (All dollars are in millions.) (Round Current ratio and Earnings per share to 2 decimal places, e.g. 15.25 and Debt to assets ratio to 1 decimal place, e.g. 78.9%. If answer is negative enter it with a negative sign preceding the number e.g.-15,000 or in parentheses e.g. (15,000).)
(a) Working capital
(b) Current ratio
(c) Debt to assets ratio
(d) Free cash flow
(e) Earnings per share
(f) Which company has better liquidity?
Which company has better solvency?
| Target | Wal-mart | |
| Working capital = Current assets - Current liabilities | $19,680-12,000 = $7,680 | $46,980-54,000 = -$7,020 |
| Current ratio = Current assets/Current liabilities | $19,680/12,000 = 1.64 | $46,980/54,000 = 0.87 |
| Debt to assets ratio = Total liabilities/Total assets | $36,876/52,680 = 0.7 | $101,388/168,980 = 0.6 |
| Free cash flow = Net cash provided by operating activities-Cash paid for capital expenditure | $4,600-3,400 = $1,200 | $23,000-11,700 = $11,300 |
| Earnings per share = Net income /Weighted average common shares outstanding | $1,703/650 = $2.62 | $8,268/2,650 = $3.12 |
f.
Which company has better liquidity - Target
Which company has better solvency - Target
Selected financial data of two competitors, Target and Wal-Mart, are presented here. (All dollars are in...