Response to Classmates Discussions
kingstonman41
Week6Discussion1ClassmatesResponse.docxWeek 6 Classmate Discussion 1 Response
Guided Response: Respond to at least two of your fellow students’ or instructor posts in a substantive manner and provide information or concepts that they may not have considered. Each response should have a minimum of 100 words and be respectful of others’ opinions and beliefs that differ from your own. Support your position by using information from the week’s readings. You are encouraged to post your required replies earlier in the week to promote more meaningful and interactive discourse in this discussion forum. Continue to monitor the discussion forum until Day 7 and respond with robust dialogue to anyone who replies to your initial post.
Below are two of my classmate with the week 6 of their discussion that I need response to their name are Jamie Choate and Ashley Thiberville
TuesdayJun 23 at 11:10am
A horizontal analysis is an analysis of financial statement over a series of years which reflects the changes of dollars from base year to current year as well as the percentage of change (Porter & Norton, 2018). The statements are read from left to right and at allow the analyst to quickly spot an unusual changes in accounts from the previous year (Porter & Norton, 2018).
The horizontal analysis of Build-A-Bear Workshop can be found on the tables below. There is a comparative balance sheet, income statement, and cash flow statement. The most significant change is on the statement of cash flows where the prepaid expenses and other assets increase by 5858%. Prepaid expenses rose from 98,000 in 2019 to 5,839,000 in 2020. This is something that needs to be looked into since it causes the net cash from operating activities to increase to 125% when all other percent changes are in the negative with the exception of the receivables net.
Some other key points in the analysis are in the balance sheet, cash increased by 49%, inventories decreased by 9% and accounts payable decreased by 30%. This shows that business has improved in the last year. In addition on the income statement, net sales decreased by 1% but commercial revenue increased by 81%. In contrast, cost of commercial goods increased by 64% which shows that they are having a difficult time controlling cost with the exception of administrative costs which decreased by 3%. Overall, net income increased by 99% over the last year which also supports the balance sheet analysis that shows that business did improve over the last year.
While the results of the analysis show positive change for the company, I do not feel that they are in a good spot yet. They still have a lot of areas to focus on and with the current market and outlook for the toy industry I am not sure that they can pull the company back up. I believe this is one that would need to be monitored for a couple more years and would need to continue to show positive results before the risk of investment would be lowered.
References
Build A Bear Workshop. (2020). Financial Reports. Retrieved from https://buildabear.gcs-web.com/financial-information/annual-reports (Links to an external site.)
Porter, G., & Norton, C. (2018). Using financial accounting information: The alternative to debits and credits (10th ed.). Retrieved from https://www.cengage.com
Tuovila, A. (2019, August 28). Horizontal Analysis. Retrieved from https://www.investopedia.com/terms/h/horizontalanalysis.asp
TuesdayJun 23 at 4:23pm
|
Target Comparitive Balance Sheet (millions) |
1-Feb-20 |
1-Feb-19 |
Increase/(Decrease) $ |
Increase/(Decrease)% |
|
Assets |
|
|
|
|
|
Cash and cash equivalents |
$2,577 |
$1,556 |
$1,021 |
64.33% |
|
Inventory |
8,992 |
9,497 |
($505) |
-5.32% |
|
Other current assets |
1,333 |
1,466 |
-$133 |
-9.07% |
|
Total current assets |
12,902 |
12,519 |
$383 |
3.06% |
|
Property and equipment |
|
|
|
|
|
Land |
6,036 |
6,064 |
($28) |
0.46% |
|
Buildings and improvements |
30,603 |
29,240 |
$1,363 |
4.45% |
|
Fixtures and equipment |
6,083 |
5,912 |
$171 |
2.81% |
|
Computer hardware and software |
2,692 |
2,544 |
$148 |
5.49% |
|
Construction-in-progress |
533 |
460 |
$73 |
13.70% |
|
Accumulated depreciation |
-19,664 |
-18,687 |
($977) |
-4.97% |
|
Property and equipment, net |
26,283 |
25,533 |
$750 |
2.85% |
|
Operating lease assets |
2,236 |
1,965 |
$271 |
12.12% |
|
Other noncurrent assets |
1,358 |
1,273 |
$85 |
6.26% |
|
Total assets |
$42,779 |
$41,290 |
$1,489 |
3.48% |
|
Liabilities and shareholders’ investment |
|
|
|
|
|
Accounts payable |
$9,920 |
$9,761 |
$159 |
1.60% |
|
Accrued and other current liabilities |
4,406 |
4,201 |
$205 |
4.65% |
|
Current portion of long-term debt and other borrowings |
161 |
1,052 |
($891) |
-81% |
|
Total current liabilities |
14,487 |
15,014 |
($527) |
-3.64% |
|
Long-term debt and other borrowings |
11,338 |
10,223 |
$1,115 |
9.83% |
|
Noncurrent operating lease liabilities |
2,275 |
2,004 |
$271 |
11.91% |
|
Deferred income taxes |
1,122 |
972 |
$150 |
13.37% |
|
Other noncurrent liabilities |
1,724 |
1,780 |
($56) |
-3.25% |
|
Total noncurrent liabilities |
16,459 |
14,979 |
$1,480 |
8.94% |
|
Shareholders’ investment |
|
|
|
|
|
Common stock |
42 |
43 |
($1) |
-2.38% |
|
Additional paid-in capital |
6,226 |
6,042 |
$184 |
2.96% |
|
Retained earnings |
6,433 |
6,017 |
$416 |
6.47% |
|
Accumulated other comprehensive loss |
-868 |
-805 |
($63) |
-7.26% |
|
Total shareholders’ investment |
11,833 |
11,297 |
$536 |
4.53% |
|
Total liabilities and shareholders’ investment |
$42,779 |
$41,290 |
$1,489 |
3.48% |
|
Target Corp. Comparative Income Statement (Millions) |
2019 |
2018 |
Increase/ Decrease $ |
Increase/Decrease % |
|
Sales |
$77,130 |
$74,433 |
$2,697 |
3.63% |
|
Other revenue |
982 |
923 |
59 |
6.39% |
|
Total revenue |
78,112 |
75,356 |
2756 |
51.46 |
|
Cost of sales |
54,864 |
53,299 |
1565 |
2.94 |
|
Selling, general and administrative expenses |
16,233 |
15,723 |
510 |
3.24 |
|
Depreciation and amortization (exclusive of depreciation included in cost of sales) |
2,357 |
2,224 |
133 |
5.98 |
|
Operating income |
4,658 |
4,110 |
548 |
13.33 |
|
Net interest expense |
477 |
461 |
16 |
3.47 |
|
Net other (income) / expense |
-9 |
-27 |
18 |
66.67 |
|
Earnings from continuing operations before income taxes |
4,190 |
3,676 |
514 |
13.98 |
|
Provision for income taxes |
921 |
746 |
175 |
23.46 |
|
Net earnings from continuing operations |
3,269 |
2,930 |
339 |
11.57 |
|
Discontinued operations, net of tax |
12 |
7 |
5 |
71.43 |
|
Net earnings |
$3,281 |
$2,937 |
344 |
11.71 |
|
Basic earnings per share |
|
|
|
|
|
Continuing operations |
$6.39 |
$5.54 |
0.85 |
15.34 |
|
Discontinued operations |
0.02 |
0.01 |
0.01 |
1 |
|
Net earnings per share |
$6.42 |
$5.55 |
0.87 |
15.68 |
|
Diluted earnings per share |
|
|
|
|
|
Continuing operations |
$6.34 |
$5.50 |
0.84 |
15.27 |
|
Discontinued operations |
0.02 |
0.01 |
0.01 |
1 |
|
Net earnings per share |
$6.36 |
$5.51 |
0.85 |
15.43 |
|
Weighted average common shares outstanding |
|
|
|
|
|
Basic |
510.9 |
528.6 |
-17.7 |
-3.35 |
|
Diluted |
515.6 |
533.2 |
-17.6 |
-3.3 |
|
Antidilutive shares |
— |
— |
|
|
|
Comparative Cash Flows Statement (millions) |
2019 |
2018 |
increase/ (Decrease) $ |
Increase/ (Decrease) % |
|
Operating activities |
|
|
|
|
|
Net earnings |
$3,281 |
$2,937 |
$344 |
11.71% |
|
Earnings from discontinued operations, net of tax |
12 |
7 |
$5 |
71.43% |
|
Net earnings from continuing operations |
3,269 |
2,930 |
339 |
11.57% |
|
Adjustments to reconcile net earnings to cash provided by operations: |
|
|
|
|
|
Depreciation and amortization |
2,604 |
2,474 |
$130 |
4.99% |
|
Share-based compensation expense |
147 |
132 |
$15 |
10.20% |
|
Deferred income taxes |
178 |
322 |
($144) |
-44.72% |
|
Loss on debt extinguishment |
10 |
— |
$10 |
0.00% |
|
Noncash losses / (gains) and other, net |
29 |
95 |
($66) |
69.47% |
|
Changes in operating accounts: |
|
|
|
|
|
Inventory |
505 |
-900 |
$1,405 |
156.11% |
|
Other assets |
18 |
-299 |
$317 |
106.02% |
|
Accounts payable |
140 |
1,127 |
($987) |
-87.58% |
|
Accrued and other liabilities |
199 |
89 |
$110 |
123.60% |
|
Cash provided by operating activities—continuing operations |
7,099 |
5,970 |
$1,129 |
18.91% |
|
Cash provided by operating activities—discontinued operations |
18 |
3 |
$15 |
5.00% |
|
Cash provided by operations |
7,117 |
5,973 |
$1,144 |
19.15% |
|
Investing activities |
|
|
|
|
|
Expenditures for property and equipment |
-3,027 |
-3,516 |
($6,543) |
186.09% |
|
Proceeds from disposal of property and equipment |
63 |
85 |
($22) |
-25.88% |
|
Cash paid for acquisitions, net of cash assumed |
— |
— |
|
|
|
Other investments |
20 |
15 |
$5 |
33.33% |
|
Cash required for investing activities |
-2,944 |
-3,416 |
($6,360) |
-183.82% |
|
Financing activities |
|
|
|
|
|
Additions to long-term debt |
1,739 |
— |
$1,739 |
0.00% |
|
Reductions of long-term debt |
-2,069 |
-281 |
($1,788) |
636.30% |
|
Dividends paid |
-1,330 |
-1,335 |
$5 |
0.37% |
|
Repurchase of stock |
-1,565 |
-2,124 |
$559 |
26.32% |
|
Stock option exercises |
73 |
96 |
($23) |
-23.96% |
|
Cash required for financing activities |
-3,152 |
-3,644 |
$492 |
13.50% |
|
Net (decrease) / increase in cash and cash equivalents |
1,021 |
-1,087 |
$2,108 |
193.93% |
|
Cash and cash equivalents at beginning of period |
1,556 |
2,643 |
($1,087) |
-41.13% |
|
Cash and cash equivalents at end of period |
$2,577 |
$1,556 |
$1,021 |
65.62% |
|
Supplemental information |
|
|
|
|
|
Interest paid, net of capitalized interest |
$492 |
$476 |
$16 |
3.39% |
|
Income taxes paid |
696 |
373 |
$323 |
86.60% |
|
Leased assets obtained in exchange for new finance lease liabilities |
379 |
130 |
$249 |
191.54% |
|
Leased assets obtained in exchange for new operating lease liabilities |
464 |
246 |
$438 |
178.05% |
A horizontal analysis compares historical data over a series of periods, such as years or quarters and helps the viewer easily spot trends (Porter & Norton, 2018). Target Corp’s comparative analysis shows that the company is investing in inventory control with a 156% jump in 2019, showing that the company is doing a better job of purchasing and selling through inventory. The company continues to perform well and show that it is investing in the future of the business by being more efficient and conscious of financial activity, improving in many fields from 20118.
Porter, G., & Norton, C. (2018). Using financial accounting information: The alternative to debits and credits (10th ed.). Retrieved from https://www.cengage.com (Links to an external site.)
Target Corporation. (2020). “Annual Report: 2019.” https://corporate.target.com/annual-reports/2019/10-K/10-K-Part-II/Item-8-Financial-Statements-and-Supplementary-Data#report6
