Question

Problem 9-5 Your answer is partially correct. Suppose selected financial data of Target and Wal-Mart for 2017 are presented here (in millions). Net sales Cost of goods sold Selling and administrative expenses Interest expense Other Income (expense) Income tax expense Net income Wal-Mart Target Corporation Stores Inc. Income Statement Data for Year $66,900 $417,000 44,000 308,000 14,400 79,000 750 1,800 (95) (400) 1,500 6,600 $ 6,155 $ 21,200 Current assets Noncurrent assets Total assets Balance Sheet Data (End of Year) $17,000 $45,000 26,800 120,000 $43,800 $165,000 $10,000 $56,000 17,300 44,000 16,500 65,000 $43,800 $165,000 Current liabilities Long-term debt Total stockholders' equity Total liabilities and stockholders' equity Beginning-of-Year Balances $43,000 $165,000 Total assets

Answer 1

Ratios

Target Ratio 2 Accounts Receivable Turnover Formulas Wal-Mart 106.9 times Net sales/ Average Accounts Receivable Calculation Target =66900/7500 Wal-Mart -417000/3900 8.9 7 Asset Turnover 1.54 2.53 times Net sales/ Average Total Assets =66900/((43000+43800)/2) -417000/((165000+165000)/2) 9 Return on Common Stockholders Equity 41.2% 32.9% % Net Income/ Average Common Stockholders Equity =6155/((13400+16500)/2) =21200/(164000+65000)/2) 11 Times Interest Earned 11.2 16.4 times Earnings before interest and taxes/ Interest expense =(6155+750+1500)/750 =(21200+1800+6600)/1800