Question

Suppose selected financial data of Target and Wal-Mart for 2020 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 Current assets Noncurrent assets Total assets Current liabilities Long-term debt Total stockholders' equity Total liabilities and stockholders' equity Target Wal-Mart Corporation Stores, Inc. Income Statement Data for Year $65,357 $408,214 45,583 304,657 15,101 79,607 707 2,065 (94) (411) 1,384 7.139 $ 2,488 $ 14,335 Balance Sheet Data (End of Year) $18,424 $48,331 26,109 122.375 $44,533 $170,706 $11,327 $55,561 17.859 44.089 15,347 71,056 $44,533 $170.706 Beginning-of-Year Balances $44.106 $163,429 13.712 65.682 10.512 55.390 30,394 97,747 Other Data $7.525 $4,025 6.942 33.836 5.881 26.249 1.729 12.184 496 4.217 Total assets Total stockholders' equity Current liabilities Total liabilities Average net accounts receivable Average inventory Net cash provided by operating activities Capital expenditures Dividends

Answer 1

Ratio Formula 1 Current Ratio Current ratio = Total current assets / Total current liabilities 2 Accounts Receivable Turnover Accounts receivable turnover ratio = Net sales / Average accounts receivable 3 Average Collection Period Average collection period = No. of days in year / Net credit sales * Average accounts receivables 4 Inventory Turnover Inventory turnover = Cost of goods sold / Average inventory 5 Days in Inventory Days in inventory = No. of days in year / Cost of goods sold * Average inventory 6 Profit Margin Profit margin = Net income / Net sales * 100 7 Asset Turnover Asset turnover = Net sales / Average assets 8 Return on Assets Return on assets = Net income / Average assets * 100 9 Return on Stockholders' Equity Return on Common stockholder's equity = Net income / Average Common stockholder's equity * 100 10 Debt to Assets Ratio Debt to assets ratio = Total liabilities / Total assets * 100 11 Times Interest Earned Time interest earned = Income before interest and taxes / Interest expenses 12 Free Cash Flow Free cash flow = Net cash provided by operating activities - Capital expenditures - Dividends Target Wal-Mart Calculation Answer Calculation Answer $18,424 / $11,327 1.63 : 1 $48,331 / $55,561 0.87 : 1 $65,357 / $7,525 8.7 $408,214 / $4,025 101.4 365 / $65,357 * $7,525 42 365 / $408,214 * $4,025 3.6 $45,583/$6,942 6.6 $304,657 / $33,836 9 365 / $45,583 * $6,942 55.6 365 / $304,657 * $33,836 40.5 $2,488 / $65,357 *100 3.80% $14,335 / $408,214 * 100 3.50% $65,357 / $44,319.50 1.5 $408,214 / $167,067.50 2.4 $2,488 / $44,319.50 *100 5.60% $14,335 / $167,067.50 * 100 8.60% $2,488 / $14,529.50 *100 17.10% $14,335 / $68,369 * 100 21% $29,186/$44,533 * 100 66% $99,650 / $170,706 * 100 58% $4,673/ $707 6.6 $23,950 / $2,065 11.6 $5,881 - $1,729 - $496 3656 $26,249 - $12,184 - $4,217 9848

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