2009 2008 Selected Income Statement, Balance Sheet, and Related Data: Income Statement 2010 Sales $65,786,000,000 Less: Cost of goods sold 45,725,000,000 $63,435,000,000 44,062,000,000 $62,884,000,000 44,157,000,000 Gross profit Less: Selling, general, and administrative expenses Less: Other expenses Earnings before interest and taxes (EBIT) Less: Interest expense 20,061,000,000 13,469,000,000 860,000,000 19,373,000,000 13,078,000,000 1,521,000,000 18,727,000,000 12,954,000,000 1,609,000,000 5,252,000,000 757,000,000 4,673,000,000 801,000,000 4,402,000,000 866,000,000 Earnings before taxes (EBT) Less: Taxes 4,495,000,000 1,575,000,000 3,872,000,000 1,384,000,000 3,536,000,000 1,322,000,000 $2,920,000,000 609,000,000 $0.87 $2,488,000,000 496,000,000 $2,214,000,000 465,000,000 $0.62 $0.67 2010 2009 2008 $1,712,000,000 6,153,000,000 7,596,000,000 1,752,000,000 $2,200,000,000 6,966,000,000 7,179,000,000 2,079,000,000 $864,000,000 8,084,000,000 6,705,000,000 1,835,000,000 Net income Less: Common dividends paid Dividends per share Balance Sheet Data Assets: Cash and marketable securities Receivables Inventory Other current assets Total current assets Net fixed assets Other long-term assets Total assets Liabilities and Equity: Accounts payable Accruals Other current liabilities Total current liabilities Long-term liabilities 17,213,000,000 25,493,000,000 999,000,000 18,424,000,000 25,280,000,000 829,000,000 17,488,000,000 25,756,000,000 862,000,000 $43,705,000,000 $44,533,000,000 $44,106,000,000 $6,625,000,000 3,326,000,000 119,000,000 $6,511,000,000 3,120,000,000 1,696,000,000 $6,337,000,000 2,913,000,000 1,262,000,000 10,070,000,000 18,148,000,000 11,327,000,000 17,859,000,000 10,512,000,000 19,882,000,000 Total debt 28,218,000,000 29,186,000,000 30,394,000,000 59,000,000 3,311,000,000 12,117,000,000 62,000,000 2,919,000,000 12,366,000,000 63,000,000 2,762,000,000 10,887,000,000 15,487,000,000 15,347,000,000 13,712,000,000 Common stock Additional paid-in capital Retained earnings Total equity Total debt and equity Other Relevant Data Common shares outstanding Total dividends paid Market price per share $43,705,000,000 $44,533,000,000 $44,106,000,000 704,038,218 609,000,000 744,644,454 496,000,000 752,712,464 465,000,000 $54.35 $51.27 $31.20 Given Target's financial data, answer the questions that follow: What percentage of the company is currently financed by existing shareholders and bondholders? Can Target afford to service its debt obligations? To answer these questions, evaluate each debt management ratio and the trend of the component account balances. (Note: Round your answers to two decimal places.) consistently from year to year, as did the company's 1. Over the period of 2008 to 2010, Target's use of debt capital, in dollar terms, debt ratio. To identify the accounts that contributed to these behaviors, consider the fluctuations in the asset and liability accounts over the three-year period. Therefore, from 2008 to 2010, the accounts that contributed to the previously identified change in the debt ratio include which of the following? Check all that apply. Long-term liabilities, which changed by $1,734,000,000 Payables, which changed by $288,000,000 Other long-term assets, which changed by $137,000,000 Other current liabilities, which changed by $1,143,000 Net fixed assets, which changed by $263,000,000 Accruals, which changed by $413,000,000 Receivables, which changed by $1,931,000,000 Cash and marketable securities, which changed by $848,000,000 Other current assets, which changed by $83,000,000 Inventory, which changed by $891,000,000 2. The reciprocal of the called the financing. This value is one component of the three important drivers of financial performance: the company's indicates the dollars of total assets financed per dollar of equity equation, which is used to disaggregate the company's return on equity (ROE) into asset utilization efficiency, and use of % % % % Target Corporation Debt Management Ratios Debt ratio 2010 2009 2008 Equity ratio 2010 2009 2008 Equity multiplier 2010 2009 2008 TIE ratio 2010 % % HII III 2009 2008 The data indicates that as Target's debt ratio decreases, its equity multiplier 3. Which of the following statements are correct? Check all that apply. The behavior of the debt ratio at least partially explains the observed behavior of Target's Accounts payable account between 2008 and 2010. The 12.94% increase in the Total Equity account, between 2008 and 2010, partially explains the observed behavior of the equity ratio and the equity multiplier. The behavior of the equity ratio and the equity multiplier at least partially explains the 0.91% reduction in the Total Asset account between 2008 and 2010. One contributing factor to the observed behavior of the TIE ratio is the trend in Target's interest expense. The behavior of the debt ratio at least partially explains the observed behavior of Target's Other Current liabilities account between 2008 and 2010. 2009 2008 Selected Income Statement, Balance Sheet, and Related Data: Income Statement 2010 Sales $65,786,000,000 Less: Cost of goods sold 45,725,000,000 $63,435,000,000 44,062,000,000 $62,884,000,000 44,157,000,000 Gross profit Less: Selling, general, and administrative expenses Less: Other expenses Earnings before interest and taxes (EBIT) Less: Interest expense 20,061,000,000 13,469,000,000 860,000,000 19,373,000,000 13,078,000,000 1,521,000,000 18,727,000,000 12,954,000,000 1,609,000,000 5,252,000,000 757,000,000 4,673,000,000 801,000,000 4,402,000,000 866,000,000 Earnings before taxes (EBT) Less: Taxes 4,495,000,000 1,575,000,000 3,872,000,000 1,384,000,000 3,536,000,000 1,322,000,000 $2,920,000,000 609,000,000 $0.87 $2,488,000,000 496,000,000 $2,214,000,000 465,000,000 $0.62 $0.67 2010 2009 2008 $1,712,000,000 6,153,000,000 7,596,000,000 1,752,000,000 $2,200,000,000 6,966,000,000 7,179,000,000 2,079,000,000 $864,000,000 8,084,000,000 6,705,000,000 1,835,000,000 Net income Less: Common dividends paid Dividends per share Balance Sheet Data Assets: Cash and marketable securities Receivables Inventory Other current assets Total current assets Net fixed assets Other long-term assets Total assets Liabilities and Equity: Accounts payable Accruals Other current liabilities Total current liabilities Long-term liabilities 17,213,000,000 25,493,000,000 999,000,000 18,424,000,000 25,280,000,000 829,000,000 17,488,000,000 25,756,000,000 862,000,000 $43,705,000,000 $44,533,000,000 $44,106,000,000 $6,625,000,000 3,326,000,000 119,000,000 $6,511,000,000 3,120,000,000 1,696,000,000 $6,337,000,000 2,913,000,000 1,262,000,000 10,070,000,000 18,148,000,000 11,327,000,000 17,859,000,000 10,512,000,000 19,882,000,000 Total debt 28,218,000,000 29,186,000,000 30,394,000,000 59,000,000 3,311,000,000 12,117,000,000 62,000,000 2,919,000,000 12,366,000,000 63,000,000 2,762,000,000 10,887,000,000 15,487,000,000 15,347,000,000 13,712,000,000 Common stock Additional paid-in capital Retained earnings Total equity Total debt and equity Other Relevant Data Common shares outstanding Total dividends paid Market price per share $43,705,000,000 $44,533,000,000 $44,106,000,000 704,038,218 609,000,000 744,644,454 496,000,000 752,712,464 465,000,000 $54.35 $51.27 $31.20 Given Target's financial data, answer the questions that follow: What percentage of the company is currently financed by existing shareholders and bondholders? Can Target afford to service its debt obligations? To answer these questions, evaluate each debt management ratio and the trend of the component account balances. (Note: Round your answers to two decimal places.) consistently from year to year, as did the company's 1. Over the period of 2008 to 2010, Target's use of debt capital, in dollar terms, debt ratio. To identify the accounts that contributed to these behaviors, consider the fluctuations in the asset and liability accounts over the three-year period. Therefore, from 2008 to 2010, the accounts that contributed to the previously identified change in the debt ratio include which of the following? Check all that apply. Long-term liabilities, which changed by $1,734,000,000 Payables, which changed by $288,000,000 Other long-term assets, which changed by $137,000,000 Other current liabilities, which changed by $1,143,000 Net fixed assets, which changed by $263,000,000 Accruals, which changed by $413,000,000 Receivables, which changed by $1,931,000,000 Cash and marketable securities, which changed by $848,000,000 Other current assets, which changed by $83,000,000 Inventory, which changed by $891,000,000 2. The reciprocal of the called the financing. This value is one component of the three important drivers of financial performance: the company's indicates the dollars of total assets financed per dollar of equity equation, which is used to disaggregate the company's return on equity (ROE) into asset utilization efficiency, and use of % % % % Target Corporation Debt Management Ratios Debt ratio 2010 2009 2008 Equity ratio 2010 2009 2008 Equity multiplier 2010 2009 2008 TIE ratio 2010 % % HII III 2009 2008 The data indicates that as Target's debt ratio decreases, its equity multiplier 3. Which of the following statements are correct? Check all that apply. The behavior of the debt ratio at least partially explains the observed behavior of Target's Accounts payable account between 2008 and 2010. The 12.94% increase in the Total Equity account, between 2008 and 2010, partially explains the observed behavior of the equity ratio and the equity multiplier. The behavior of the equity ratio and the equity multiplier at least partially explains the 0.91% reduction in the Total Asset account between 2008 and 2010. One contributing factor to the observed behavior of the TIE ratio is the trend in Target's interest expense. The behavior of the debt ratio at least partially explains the observed behavior of Target's Other Current liabilities account between 2008 and 2010