SEC 10-K Target

Target SEC 10-K Paper

Abstract

Target Corporation offers to its client’s chic single out goods at reduced prices. Its ability to deliver the chosen shopping experience to its client’s and set the company unique from its competitors. The level of technological innovations combined with the supply chain and customer loyalty are some of its critical supporting feature to the success of the company. During the 2015 and 2016, Target established an ambitious strategy that would restore the corporation to long-term growth through the creation of shareholders’ value. The journey was marked by significant transition witnessed in 2016. Until January 2015, Target operated retail in Canadian segment. Therefore, financial results from Canada before existing Canadian retail were included in Target financial statements but categorized as discontinued operations. This paper provides discuss on analysis of the financial situation, results of operations and detailed financial statements. The review involves examination of crucial Section 10-K elements which will include the reported income statement, stockholders equity, and finally features of cash flows

Introduction

Target was established in 1902 in the central-west of Minneapolis in Minnesota. It was founded by an entrepreneur called George Dayton as a Dayton department store. Today the store has expanded to become globally with 1785 corporate retails under the name Target. In this paper, I will explore the current financial position of the company for the past three years and relate to those elements learned in the course. In the review of the company, I intend to examine its crucial Section 10-K elements which will include the reported income statement, stockholders equity, and finally features of cash flows. To obtain a generalized public position, I plan to break down topics in this order before making details of the everyday operations of the cash flows. The operational cash flows contain cumulative numbers which are affected.

Stockholder’ Equity

Before attending this accounting class, I never had any idea concerning the importance of company’s finical or what organizational data on the stock market represented. The world trade entity and values may vary hourly so that the higher world trade value the more valuable is the share. Higher valuable shares imply the more worthiness of a company to its shareholders. The value of the shares helps the owners measure the profitability of their investments. Therefore, shareholders with the finical 10-K reports can make decision regarding their stock exchange. Currently, the company is valued at $69.23 per share. For this year, Target is ranked position 38 out of the 500 fortune companies listed.

According to a report by NASDAQ website, State Street and Vanguard Group are currently the leading entities with 10% and 5% percent of the total listed shares respectively. From the shareholders’ consolidated statement of investment, we notice that values of retained earnings, par stock and common stock have fluctuated over the last three years as the shareholders’ total values decline. We also notice that due to the poorly performing subsidiary stores located in Canadian market, Target is a result in the process of liquidation. We anticipate that together with other operation areas, such liquidation will have an impact on the future of Target.

Comprehensive Income Statement

The income statement reports the general financial performance of an organization. It constitutes an overview of net income and the sales of a given fiscal year. For the period of the past three years, Target has reported a steady increase both cost of sales and sales which in turn affect the gross profit/margin. There is also a gradual increase in the gross profit annually depicting a slight markup on the sold goods. It is also fascinating to notice a loss of net earnings during the prior year. However, the loss of net earnings reflects even in the absence of profit in 2014. We also notice a soar in from the 2015 operational trend that influenced the rise in the net earnings by a large periphery.

Financially, the soaring indicate a recovery stage happened on ceased sales operation from 2014 to 2015. Also, the income statement report losses after adjustments to liabilities such as tax and currency, and employee benefits and pensions. It finally reports a detailed income/loss as reflected in 2013, 2014, and 2015 values. We also notice of the sales of services to outsource firms such as the Target Red Card Credit and Pharmacy during the 2015 reported as discontinued operation. It was a significant contributor to the changing figures contained in a comprehensive income statement for the three years.

Balance Sheet

In details of the income and expenditures, we focus on the company’s assets, capital, and liabilities. These three components of the form what in other words is commonly referred to as the consolidated statement of financial position as reported for each year. The statement is contained on page thirty-six. During the last year, cash assets constituted the cash related equivalents like short-term investments. Such cash assets increased considerably depicting the discussed sales in the earlier section ("Welcome to our 2016 Annual Report", 2016)

The overall current assets had slight increase. On the contrary, values for equipment, plant, and property as well as written off depreciation show gradual changes as in the PPE Value. While liabilities and shareholders’ capital revealed a slight decrease, the asset had shown a slight increase. Most of the current liabilities are sales tax and pension. The effects of discontinued sales of Target Red Card and Pharmacy is reflected less of allowance for collectables and the accompanying liabilities. Due the decline in both assets and liabilities the entire shareholders’ capital also falls as is shown in the retained earnings, paid-in-capital, and common stock.

Consolidated Statement of Cash Flows

The statement of cash flow contained in the report split the investing, financing and operating cost of Target. We notice from the financial note a comment on page 39, “Our retail store record revenue at the point of sales” (SEC 10-K). The corporation follows a revenue recognition accounting principle by recording sales revenue only when earned. Target makes use of LIFO and Retail Inventory Method (RIM). Lower LIFO cost or market is used to state the inventory (page 46). Monitoring its inventory at the right time facilitate registration of as well as coding using bar system for spot paying means of cash or through a credit card. It, therefore, reveals no allowance contained in the SEC 10-K since direct dealing with the sale losses is restricted to the customer account (Weil, Schipper & Francis, 2013).

The amortization of plant, property and equipment is also another significant feature written off under the operational activities contained in the both the income statement and statement of cash flows. The report reveals a little increase during the last three years. Besides, in the notes, it is stated that that Target employs straight line approach to determine depreciation over lease terms or useful lives (pg 47). The depreciation of assets is listed based on estimated useful lives.

Investing activities depict a strand of cash as provided. It is clear that investing activities in 2014 was more expensive compared to 2013 and 2015. It is further reflected in the previous discussion of discontinued operation of outsourcing. One can agree with the sale that very little amount of cash was devoted 2015 investing activities. On the contrary, in this section, financial activities demonstrate an increase in required cash particularly in 2014. The two activities suggestion a downscaling trend in the overall of Target, unless immediate changes are initiated.

Conclusion

Using Target financial statements combined with materials issued during the course, I have prepared and presented this report explaining the numerical analysis. Balance sheet reported income statement, the stockholder's equity, and details of cash flows had enhanced my understanding of Target financial situation. The corporation challenges internationally market making it best suitable to follow.

References

Weil, R. L., Schipper, K., & Francis, J. (2013). Financial accounting: an introduction to concepts, methods and uses. Cengage Learning.