Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material is also available under the Investor Relations link at the company’s website (www.target.com).

Required:
1. Does Target use average cost, FIFO, or LIFO as its inventory cost flow assumption?
2. In addition to the purchase price, what additional expenditures does the company include in the initial cost of inventory?
3. Calculate the gross profit ratio and the inventory turnover ratio for the fiscal year ended February 1, 2020. Compare Target’s ratios with the industry averages of 24.5% and 7.1 times. Determine whether Target’s ratios indicate the company is more/less profitable and sells its inventory more/less frequently compared to the industry average.