Business Accounting

profilebarbara1975
problem_6.xlsx
Home>Business & Finance homework help>Accounting homework help>Business Accounting

Sheet1

Problem 6 , Selected financial data of Target and Wal-Mart for a recent year are presented here (in millions).
Target Corporation Wal-Mart Stores, Inc.
Income Statement Data for Year
Net sales $67,390 $405,046
Cost of goods sold 45,725 304,657
Selling and administrative expenses 13,469 79,607
Interest expense 757 1,884
Other income (expense) (2,944) 2,576
Income tax expense 1,575 7,139
Net income $2,920 $14,335
Balance Sheet Data (End of Year)
Current assets $17,213 $ 48,331
Noncurrent assets 26,492 122,375
Total assets $43,705 $170,706
Current liabilities $10,070 $ 55,561
Long-term debt 18,148 44,396
Total stockholders' equity 15,487 70,749
Total liabilities and stockholders' equity $43,705 $170,706
Beginning-of-Year Balances
Total assets $44,533 $163,429
Total stockholders' equity 15,347 65,285
Current liabilities 11,327 55,390
Total liabilities 29,186 98,144
Other Data
Average net receivables $6,560 $4,025
Average inventory 7,388 33,836
Net cash provided by operating activities 5,271 26,249
Instructions: (Expect slight differences than printed solutions manual due to significant digits in calcuations.
(a)(1) Compute the current ratio for each company.
Target Current ratio Current Assets = 17,213 = 1.7 to 1
Current Liabilities 10,070
Wal-Mart Current ratio Current Assets = 48,331 = 0.9 to 1
Current Liabilities 55,561
(a)(2) Compute the receivables turnover for each company.
Target Receivables turnover Credit Sales = =
Average net receivable 6,560
Wal-Mart Receivables turnover Credit Sales = =
Average net receivable 4,025
(a)(3) Compute the average collection period for each company.
Target Average collection period 365 = 365 =
Receivable turnover
Wal-Mart Average collection period 365 = =
Receivable turnover
(a)(4) Compute the inventory turnover for each company.
Target Inventory turnover Cost of goods sold = 45,725 = 6.2
Average inventory 7,388
Wal-Mart Inventory turnover Cost of goods sold = 304,657 = 9.0
Average inventory 33,836
(a)(5) Compute the days in inventory for each company.
Target Days in inventory 365 = 365 = 59.0
Inventory Turnover 6.2
Wal-Mart Days in inventory 365 = 365 = 40.5
Inventory Turnover 9.0
(a)(6) Compute the profit margin for each company.
Target Profit margin Net Income 2,920 = 4.3%
Net sales 67,390
Wal-Mart Profit margin Net Income 14,335 = 3.5%
Net sales 405,046
(a)(7) Compute the Debt to total assets ratio for each company.
Target Debt to total assets Total debts = =
Total assets
Wal-Mart Debt to total assets Total debts = =
Total assets
Compare the profitability of the two companies.

Sheet2

Sheet3