Calculation of Gross Profi t Ratio for Wal-Mart and Target The following information was summarized from the consolidated statements of income of Wal-Mart Stores, Inc. and Subsidiaries for the years ended January 31, 2009 and 2008, and the consolidated statements of operations of Target Corporation for the years ended January 31, 2009, and February 2, 2008. (For each company, years are labeled as 2008 and 2007, respectively, although Wal-Mart labels these as the 2009 and 2008 fi scal years.)

2008 2007

(in Millions) Sales* Cost of Sales Sales* Cost of Sales Wal-Mart $401,244 $306,158 $374,307 $286,350 Target 62,884 44,157 61,471 42,929

*Described as net sales by Wal-Mart.

Required 1. Calculate the gross profi t ratios for Wal-Mart and Target for 2008 and 2007.
2. Which company appears to be performing better? What factors might cause the difference in the gross profi t ratios of the two companies? What other information should you consider to determine how these companies are performing in this regard?AppendixLO1