Analysis and Interpretation of Profitability
Balance sheets and income statements for Target Corporation
follow.
Income Statement | |||
---|---|---|---|
For Fiscal Years Ended ($ millions) | 2007 | 2006 | 2005 |
Sales | $ 57,878 | $ 51,271 | $ 45,682 |
Credit card revenues | 1,612 | 1,349 | 1,157 |
Total revenues | 59,490 | 52,620 | 46,839 |
Cost of sales | 39,399 | 34,927 | 31,445 |
Selling, general and administrative expenses | 12,819 | 11,185 | 9,797 |
Credit card expenses | 707 | 776 | 737 |
Depreciation and amortization | 1,496 | 1,409 | 1,259 |
Earnings before interest and income taxes | 5,069 | 4,323 | 3,601 |
Net interest expense | 572 | 463 | 570 |
Earnings before income taxes | 4,497 | 3,860 | 3,031 |
Provisions for income taxes | 1,710 | 1,452 | 1,146 |
Net earnings | $ 2,787 | $ 2,408 | $ 1,885 |
Balance Sheet | ||
---|---|---|
($ millions, except footnotes) | February 3, 2007 | January 28, 2006 |
Assets | ||
Cash and cash equivalents | $ 813 | $ 1,648 |
Credit card receivables | 6,194 | 5,666 |
Inventory | 6,254 | 5,838 |
Other current assets | 1,445 | 1,253 |
Total current assets | 14,706 | 14,405 |
Property and equipment | ||
Land | 4,934 | 4,449 |
Buildings and improvements | 16,110 | 14,174 |
Fixtures and equipment | 3,553 | 3,219 |
Computer hardware and software | 2,188 | 2,214 |
Construction-in-progress | 1,596 | 1,158 |
Accumulated depreciation | (6,950) | (6,176) |
Property and equipment, net | 21,431 | 19,038 |
Other noncurrent assets | 1,212 | 1,552 |
Total assets | $ 37,349 | $ 34,995 |
Liabilities and shareholders' investment | ||
Accounts payable | $ 6,575 | $ 6,268 |
Accrued and other current liabilities | 3,180 | 2,567 |
Current portion of long-term debt and notes payable | 1,362 | 753 |
Total current liabilities | 11,117 | 9,588 |
Long-term debt | 8,675 | 9,119 |
Deferred income taxes | 577 | 851 |
Other noncurrent liabilities | 1,347 | 1,232 |
Shareholders' investment | ||
Common stock | 72 | 73 |
Additional paid-in-capital | 2,387 | 2,121 |
Retained earnings | 13,417 | 12,013 |
Accumulated other comprehensive income (loss) | (243) | (2) |
Total shareholders' investment | 15,633 | 14,205 |
Total liabilities and shareholders' equity | $ 37,349 | $ 34,995 |
a. Compute ROE for 2007.
Do not round until your final answer. Round answer to two decimal places.
ROE =Answer%
b. Confirm that ROE equals ROE computed using the component
measures for profit margin, asset turnover, and financial leverage
using: ROE = PM * AT * FL.
Compute the components of ROE.
Do not round until your final answer. Round answers to two decimal places.
PM = Answer%
AT = Answer
FL = Answer
c. Compute adjusted ROA. Assume a tax rate of: 39.0%.
Do not round until your final answer. Round your answer to two
decimal places.
Adjusted ROA =Answer%
Part a |
ROE = Net earnings / Shareholders equity |
ROE = 2787 / 15633 |
ROE = 17.83% |
Part b |
Profit margin = 2787 / 57878 = 4.82% |
Asset turnover = 57878 / 37349 = 1.55 |
Finacial leverage = 37349 / 15633 = 2.39 |
ROE = PM x AT x FL |
ROE = 4.82% * 1.55 * 2.39 |
ROE = 17.83% |
Part c |
Adjusted ROA = Adjusted Earnings / Adjusted Total assets |
Adjusted ROA = (4497*(1-39%)) / 37349 |
ROA = 7.34% |
Analysis and Interpretation of Profitability Balance sheets and income statements for Target Corporation follow. Income Statement...
Analysis and Interpretation of Profitability Balance sheets and income statements for Target Corporation follow. Income Statement For Fiscal Years Ended ($ millions) 2007 2006 2005 Sales $ 57,878 $ 51,271 $ 45,682 Credit card revenues 1,612 1,349 1,157 Total revenues 59,490 52,620 46,839 Cost of sales 39,399 34,927 31,445 Selling, general and administrative expenses 12,819 11,185 9,797 Credit card expenses 707 776 737 Depreciation and amortization 1,496 1,409 1,259 Earnings before interest and income taxes 5,069 4,323 3,601 Net interest...
Analysis and Interpretation of Profitability Balance sheets and income statements for Target Corporation follow. Income Statement For Fiscal Years Ended ($ millions) 2007 2006 2005 Sales $ 57,878 $ 51,271 $ 45,682 Credit card revenues 1,612 1,349 1,157 Total revenues 59,490 52,620 46,839 Cost of sales 39,399 34,927 31,445 Selling, general and administrative expenses 12,819 11,185 9,797 Credit card expenses 707 776 737 Depreciation and amortization 1,496 1,409 1,259 Earnings before interest and income taxes 5,069 4,323 3,601 Net interest...
Analysis and Interpretation of Profitability Balance sheets and income statements for Target Corporation follow. Income Statement For Fiscal Years Ended (5 millions) 2007 2006 2005 Sales $ 57,878 $ 51,271 $ 45,682 Credit card revenues 1,612 1,349 1,157 Total revenues 59,490 52,620 46,839 Cost of sales 39,399 34,927 31,445 Selling, general and administrative expenses 12,819 11,185 9,797 Credit card expenses 707 776 737 Depreciation and amortization 1,496 1,409 1,259 Earnings before interest and income taxes 5,069 4,323 3,601 Net interest...
Analysis and Interpretation of Profitability Balance sheets and income statements for Target Corporation follow. Income Statement For Fiscal Years Ended ($ 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 776 737 722 Depreciation and amortization 1,409 1,259 1,098 Earnings before interest and income taxes 4,323 3,601 3,159 Net interest...
Analysis and Interpretation of Profitability Balance sheets and income statements for Target Corporation follow. Income Statement For Fiscal Years Ended ($ 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 776 737 722 Depreciation and amortization 1,409 1,259 1,098 Earnings before interest and income taxes 4,323 3,601 3,159 Net interest...
QUESTION 2 Incorrect Mark 0.00 out of 10.00P Flag question Analysis and Interpretation of Profitability Balance sheets and income statements for Target Corporation follow. Income Statement For Fiscal Years Ended ( millions) 2006 2005 2004 Sales Credit card revenues Total revenues Cost of sales Selling, general and administrative expenses Credit card expenses Depreciation and amortization Earnings before interest and income taxes Net interest expense Earnings before income taxes Provisions for income taxes Net earnings 51,271 45,682 40,928 1,349 57 1,097...
Analysis and Interpretation of Profitability Balance sheets and income statements for 3M Company follow. Consolidated Statements of Income Years ended December 31 ($ millions), 2007 2006 2005 Net sales $24,462 $22,923 $21,167 Operating expenses Cost of sales 12,735 11,713 10,408 Selling, general and administrative expenses 5,015 5,066 4,631 Research, development and related expenses 1,368 1,522 1,274 Loss/(gain) from sale of business (849) (1,074) Total operating expenses 18,269 17,227 16,313 Operating income 6,193 5,696 4,854 Interest expenses and income Interest expense...
Analysis and Interpretation of Profitability Balance sheets and income statements for 3M Company follow. Consolidated Statements of Income Years ended December 31 ($ millions) 2007 2006 2005 Net sales $24,462 $22,923 $21,167 Operating expenses Cost of sales 12,735 11,713 10,408 Selling, general and administrative expenses 5,015 5,066 4,631 Research, development and related expenses 1,368 1,522 1,274 Loss/(gain) from sale of business (849) (1,074) -- Total operating expenses 18,269 17,227 16,313 Operating income 6,193 5,696 4,854 Interest expenses and income Interest...
Analysis and Interpretation of Profitability Balance sheets and income statements for 3M Company follow. Consolidated Statements of Income Years ended December 31 ($ millions) 2007 2006 2005 Net sales $24,462 $22,923 $21,167 Operating expenses Cost of sales 12,735 11,713 10,408 Selling, general and administrative expenses 5,015 5,066 4,631 Research, development and related expenses 1,368 1,522 1,274 Loss/(gain) from sale of business (849) (1,074) Total operating expenses 18,269 17.227 16,313 Operating income 6,193 5,696 4,854 Interest expenses and income Interest expense...
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...