Question

Balance sheets and income statements for Target Corporation follow Income Statement For Fiscal Years Ended (5 millions) 2006 2005 2004 Sales $51,271 $ 45,682 $ 40,928 Credit card revenues 1,349 1,157 1,097 Total revenues 52,620 46,839 42,025 Cost of sales 34,927 31,445 28,389 Selling, general and administrative expenses 11,185 9,797 8,657 Credit card expenses 737 722 Depreciation and amortization 1,409 1,259 1,098 Earnings before interest and income taxes 4,323 3,601 3,159 Net interest expense 463 570 556 Earnings before income taxes 3,860 3,031 2,603 Provisions for income taxes 1,452 1,146 9 84 Net earnings $ 2,408 $1,885 $1,619 33 776 227 Balance Sheet (5 millions, except footnotes) January 28, 2006 January 29, 2005 Assets Cash and cash equivalents $ 1,648 $ 2,245 Credit card receivables 5,666 5,069 Inventory 5.838 Other current assets 1,253 1 ,224 Total current assets 14,405 1 3,922 Property and equipment Land 4,449 3,804 Buildings and improvements 14,174 12,518 Fixtures and equipment 3,219 2.990 Computer hardware and software 2,214 1.998 Construction-in-progress 1,158 9 62 Accumulated depreciation (6,176) (5.412) Property and equipment, net 19,038 16,860 Other noncurrent assets 1,552 1,511 Total assets $34.995 $32,293 Liabilities and shareholders' Investment Accounts payable 56268 $ Accrued and other current liabilities ENER 2,567 1,937 Current portion of long-term debt and notes payable 753 S4 Total current liabilities 9,588 Long-term debt 9,119 9,034 2 Deferred income taxes 3 851 973 5,779 8.220 9,034

Answer 1

Dear Student,

As per the HomeworkLib policy, only the first four questions hsould be ansered. Kindly take note of it.

Part A

NOPBT (2006) = Earnings before interest and income taxes = $4323

Tax on Operating Profit (2006)= 1,452+(463x38.3%) = 1,629

NOPBT	4323
Less: Tax on Operating Profit	1629
NOPAT	$2694

Part B

NOA = Operating Assets – Operating Liabilities

Operating Assets = total assets – cash

2006 = 34995-1648 = 33347

2005 = 32293-2245 = 30048

Operating Liabilities = accounts payable + accrued and other current liabilities + deferred income taxes + other noncurrent liabilities

2006 = 6268+2567+851+1232 = 10918

2005 = 5779+1937+973+1037 = 9726

	2006	2005
Operating Assets	33347	30048
Less: operating liabilities	10918	9726
NOA	$22429	$20322

Part C

RNOA = NOPAT / Average NOA

RNOA 2006 = 2694/((22429+20322)/2) = 12.60%

NOPM = NOPAT / Revenues

NOPAT 2006 = 2694/52620 = 5.12%

NOAT = Revenues / Average NOA

NOAT 2006 = 52620/((22429+20322)/2) = 2.46

Part D

NNO = NOA – Stockholder’s Equity

	2006	2005
NOA	22429	20322
Less: Stockholders’ Equity	14205	13029
NNO	$8224	$7293