Question

Wal-Mart Stores, Inc. Target Corporation Income Statement Data for Year Net sales Cost of goods sold Selling and administrative expenses Interest expense Other income (expense) Income tax expense Net income $65,300 45,000 14,000 660 $417,000 301,000 79,000 1,800 (85) (380) 1,500 4,055 7,100 $27,720 Balance Sheet Data (End of Year) Current assets Noncurrent assets Total assets Current liabilities Long-term debt Total stockholders' equity Total liabilities and stockholders $16,000 27.400 $43,400 $11,000 17,800 14,600 $50,000 121,000 $171,000 $54,000 43,000 74,000 $171,000 $43,400 equity Beginning-of-Year Balances $162,000 66,000 54,000 96,000 Total assets Total stockholders' equity Current liabilities Total liabilities $45,000 12,800 10,800 32,200 Other Data Average net accounts receivable Average inventory $7,600 7,100 5,600 1,600 470 $3,800 33,200 27,400 12,100 4,200 Net cash provided by operating activities Capital expenditures Dividends (a) For each company, compute the following ratios. (Round all answers to 2 decimal places, eg, 1.83 or 1.83%.) (a) For each company, compute the following ratios. (Round all answers to 2 decimal places, eg, 1.83 or .83%.) Ratio Current ratio Accounts receivable turnover Target Wal-Mart (1) (2) (3) 0.93 :1 109.74 times 3.33 days 9.07 times 40.26 days 8.59 times 42.48 days 6.34 times 57.59 days 6.21% 1.501 times 0.931 % Average collection period (4) Inventory turnover (5) Days in inventory (6) Profit margin (7) Asset turnover (8) Return on assets (9) Return on common stockholders' equity (10) Debt to assets ratio (11) Times interest earned (12) Free cash flow 6.65% 2.44 times 54.94 % 36.7 % 75.12 times 98.37 times 4000 15300 Click if you would like to Show Work for this question: Open Show Worck

Answer 1

Answer to Part 8.

Return on Assets = Net Income / Average Total Assets * 100

Target Corporation:
Average Total Assets = ($43,400 + $45,000) / 2
Average Total Assets = $44,200

Return on Assets = $4,055 / $44,200 * 100
Return on Assets = 9.17%

Wal-Mart Store, Inc.:
Average Total Assets = ($171,000 + $162,000) / 2
Average Total Assets = $166,500

Return on Assets = $27,720 / $166,500 * 100
Return on Assets = 16.65%

Answer to Part 9.

Return on Common Stockholders’ Equity = Net Income / Average Total Stockholders’ Equity * 100

Target Corporation:
Average Total Stockholders’ Equity = ($14,600 + $12,800) / 2
Average Total Stockholders’ Equity = $13,700

Return on Common Stockholders’ Equity = $4,055 / $13,700 * 100
Return on Common Stockholders’ Equity = 29.60%

Wal-Mart Store, Inc.:
Average Total Stockholders’ Equity = ($74,000 + $66,000) / 2
Average Total Stockholders’ Equity = $70,000

Return on Common Stockholders’ Equity = $27,720 / $70,000 * 100
Return on Common Stockholders’ Equity = 39.60%

Answer to Part 10.

Debt to Assets Ratio = Total Liabilities / Total Assets

Target Corporation:

Debt to Assets Ratio= $17,800 / $43,400
Debt to Assets Ratio = 0.41

Wal-Mart Store, Inc.:

Debt to Assets Ratio = $43,000 / $171,000
Debt to Assets Ratio = 0.25

Answer of Part 11:

Times Interest Earned = EBIT / Interest Expense

Target Corporation:

EBIT = Net Income + Income Tax Expense + Interest Expense
EBIT = $4,055 + $1,500 + $660
EBIT = $6,215

Times Interest Earned = $6,215 / $660
Times Interest Earned = 9.42

Wal-Mart Store, Inc.:

EBIT = Net Income + Income Tax Expense + Interest Expense
EBIT = $27,720 + $7,100 + $1,800
EBIT = $36,620

Times Interest Earned = $36,620 / $1,800
Times Interest Earned = 20.34