Question

Problem 18-05A a 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 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 Net income Current assets Noncurrent assets Total assets Current liabilities Balance Sheet Data (End of Year) $18,424 $48,331 26,109 122,375 $44,533 $170,706 $11,327 $55,561

Answer 1

Answer to Part 1.
Target Corporation:
Current Ratio = Current Assets / Current Liabilities
Current Ratio = $18,424 / $11,327
Current Ratio = 1.63: 1

Wal-Mart Stores, Inc.:
Current Ratio = Current Assets / Current Liabilities
Current Ratio = $48,331 / $55,561
Current Ratio = 0.87: 1

Answer to Part 2.
Target Corporation:
Accounts Receivable Turnover = Sales / Average Net Accounts Receivable
Accounts Receivable Turnover = $65,357 / $7,525
Accounts Receivable Turnover = 8.69 times

Wal-Mart Stores, Inc.:
Accounts Receivable Turnover = Sales / Average Net Accounts Receivable
Accounts Receivable Turnover = $408,214 / $4,025
Accounts Receivable Turnover = 101.42 times

Answer to Part 3.
Target Corporation:
Average Collection Period = 365 / Accounts Receivable Turnover
Average Collection Period = 365 / 8.69
Average Collection Period = 42.00 days

Wal-Mart Stores, Inc.:
Average Collection Period = 365 / Accounts Receivable Turnover
Average Collection Period = 365 / 101.42
Average Collection Period = 3.60 days

Answer to Part 4.
Target Corporation:
Inventory Turnover = Cost of Goods Sold / Average Inventory
Inventory Turnover = $45,583/$6,942
Inventory Turnover = 6.57 times

Wal-Mart Stores, Inc.:
Inventory Turnover = Cost of Goods Sold / Average Inventory
Inventory Turnover = $304,657/$33,836
Inventory Turnover = 9.00 times

Answer to Part 5.
Target Corporation:
Days in Inventory = 365 / Inventory Turnover
Days in Inventory = 365 / 6.57
Days in Inventory = 55.56 days

Wal-Mart Stores, Inc.:
Days in Inventory = 365 / Inventory Turnover
Days in Inventory = 365 / 9.00
Days in Inventory = 40.56 days