$62,884,000,000 $65,786,000,000 $63,435,000,000 1,604,000,000 1,922,000,000 45,725,000,000 44,062,000,000 $20,061,000,000 $19,373,000,000 13,469,000,000 13,078,000,000 860,000,000 1,521,000,000 2,084,000,000 2,023,000,000 $5,252,000,000 $4,673,000,000 757,000,000 801,000,000 $4,495,000,000 $3,872,000,000 1,575,000,000 1,384,000,000 $2,920,000,000 $2,488,000,000 $609,000,000 $496,000,000 $0.92 $0.67 2,064,000,000 44,157,000,000 $18,727,000,000 12,954,000,000 1,609,000,000 1,826,000,000 $4,402,000,000 866,000,000 $3,536,000,000 1,322,000,000 $2,214,000,000 $465,000,000 $0.62 Sales Credit card revenues Less: Cost of goods sold Gross profit Less: Selling, general, and administrative expenses Less: Other expenses Less: Depreciation and amortization Earnings before interest and taxes (EBIT) Less: Interest expense Earnings before taxes (EBT) Less: Taxes 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 Total debt 2010 2009 2008 $1,712,000,000 $2,200,000,000 $864,000,000 6,153,000,000 6,966,000,000 8,084,000,000 7,596,000,000 7,179,000,000 6,705,000,000 1,752,000,000 2,079,000,000 1,835,000,000 $17,213,000,000 $18,424,000,000 $17,488,000,000 25,493,000,000 25,280,000,000 25,756,000,000 999,000,000 829,000,000 862,000,000 $43,705,000,000 $44,533,000,000 $44,106,000,000 $6,625,000,000 3,326,000,000 119,000,000 $10,070,000,000 18,148,000,000 $28,218,000,000 $6,511,000,000 3,120,000,000 1,696,000,000 $11,327,000,000 17,859,000,000 $6,337,000,000 2,913,000,000 1,262,000,000 $10,512,000,000 19,882,000,000 $30,394,000,000 $29,186,000,000 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 $59,000,000 $62,000,000 3,311,000,000 2,919,000,000 12,117,000,000 12,366,000,000 $15,487,000,000 $15,347,000,000 $43,705,000,000 $44,533,000,000 $63,000,000 2,762,000,000 10,887,000,000 $13,712,000,000 $44,106,000,000 704,038,218 744,644,454 752,712,464 $465,000,000 $496,000,000 $609,000,000 $54.35 $51.27 $31.20 Target Corporation Market Value Ratios Book value per share 2010 $ 2009 $ 2008 EPS 2010 $ 2009 $ $ 2008 P/E ratio 2010 2009 2008 M/B ratio 2010 NI 2009 2008 1. From 2008 through 2010, Target's market capitalization increased. Specifically, it increased from $23,484,628,877 to $38,177,921,157 between 2008 and 2009 and to $38,264,477,148 in 2010. Which of the following statements are correct? Check all that apply. During the periods 2008 to 2009 and 2009 to 2010, the market price of Target's common shares increased by 39.15% and 5.67%, respectively. During the periods 2008 to 2009 and 2009 to 2010, the positive pressure from the increasing market prices was greater, or stronger than the offsetting, or negative, pressure from the decreased number of shares outstanding. During the periods 2008 to 2009 and 2009 to 2010, the market price of Target's common shares increased by 64.33% and 6.01%, respectively. During the periods 2008 to 2009 and 2009 to 2010, the number of common shares outstanding decreased by 1.07% and 5.45%, respectively. These changes in the company's market capitalization should be construed as news and should be investigated further. One reasonable question that should be asked is: For what reason were the shares, or approximately 6.47% of 2008's outstanding shares, repurchased during the period 2008 through 2010? Was it part of earlier planned program, or were they repurchased to reduce the supply of shares available in the equity market and thereby the market price of the shares? (Note: The answer to this question can be found, in part, by reading the company's annual reports.) 2. Similarly, from 2008 through 2010, the company's book value from year to year. In general, and assuming that everything else remains constant, this behavior should have tended to the company's market-to-book (M/B) ratio. However, over time, Target's M/B ratio had increased, which suggests that the percentage increase in the market price had been than the percentage increase in the company's book value. Because the denominator of both the market price per share and the book value per share ratios is the number of shares outstanding, the trend of the M/B ratio indicates which of the following? The market placed an increasing value on the portion of the company owned by the common shareholders. The market placed an increasing value on the portion of the company owned by the creditors and debtholders. The market placed a decreasing value on the portion of the company owned by the common shareholders. 3. Target's earnings per share (EPS) ratio, which is calculated by dividing its by the number of common shares outstanding, exhibited a consistently increasing trend, growing by between 2008 and 2009 and by between 2009 and 2010. 4. From 2008 through 2010, Target's price-to-earnings (P/E) ratio exhibited an inconsistent trend. Which of the following phenomena contributed to this pattern? Check all that apply. Between 2009 and 2010, the market price per share of Target's common stock increased by a greater percentage than that exhibited by its EPS. Between 2008 and 2009, the market price per share of Target's common stock increased by a greater percentage than that exhibited by its EPS. Between 2009 and 2010, Target's EPS increased by a greater percentage than the market price of its common shares. $62,884,000,000 $65,786,000,000 $63,435,000,000 1,604,000,000 1,922,000,000 45,725,000,000 44,062,000,000 $20,061,000,000 $19,373,000,000 13,469,000,000 13,078,000,000 860,000,000 1,521,000,000 2,084,000,000 2,023,000,000 $5,252,000,000 $4,673,000,000 757,000,000 801,000,000 $4,495,000,000 $3,872,000,000 1,575,000,000 1,384,000,000 $2,920,000,000 $2,488,000,000 $609,000,000 $496,000,000 $0.92 $0.67 2,064,000,000 44,157,000,000 $18,727,000,000 12,954,000,000 1,609,000,000 1,826,000,000 $4,402,000,000 866,000,000 $3,536,000,000 1,322,000,000 $2,214,000,000 $465,000,000 $0.62 Sales Credit card revenues Less: Cost of goods sold Gross profit Less: Selling, general, and administrative expenses Less: Other expenses Less: Depreciation and amortization Earnings before interest and taxes (EBIT) Less: Interest expense Earnings before taxes (EBT) Less: Taxes 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 Total debt 2010 2009 2008 $1,712,000,000 $2,200,000,000 $864,000,000 6,153,000,000 6,966,000,000 8,084,000,000 7,596,000,000 7,179,000,000 6,705,000,000 1,752,000,000 2,079,000,000 1,835,000,000 $17,213,000,000 $18,424,000,000 $17,488,000,000 25,493,000,000 25,280,000,000 25,756,000,000 999,000,000 829,000,000 862,000,000 $43,705,000,000 $44,533,000,000 $44,106,000,000 $6,625,000,000 3,326,000,000 119,000,000 $10,070,000,000 18,148,000,000 $28,218,000,000 $6,511,000,000 3,120,000,000 1,696,000,000 $11,327,000,000 17,859,000,000 $6,337,000,000 2,913,000,000 1,262,000,000 $10,512,000,000 19,882,000,000 $30,394,000,000 $29,186,000,000 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 $59,000,000 $62,000,000 3,311,000,000 2,919,000,000 12,117,000,000 12,366,000,000 $15,487,000,000 $15,347,000,000 $43,705,000,000 $44,533,000,000 $63,000,000 2,762,000,000 10,887,000,000 $13,712,000,000 $44,106,000,000 704,038,218 744,644,454 752,712,464 $465,000,000 $496,000,000 $609,000,000 $54.35 $51.27 $31.20 Target Corporation Market Value Ratios Book value per share 2010 $ 2009 $ 2008 EPS 2010 $ 2009 $ $ 2008 P/E ratio 2010 2009 2008 M/B ratio 2010 NI 2009 2008 1. From 2008 through 2010, Target's market capitalization increased. Specifically, it increased from $23,484,628,877 to $38,177,921,157 between 2008 and 2009 and to $38,264,477,148 in 2010. Which of the following statements are correct? Check all that apply. During the periods 2008 to 2009 and 2009 to 2010, the market price of Target's common shares increased by 39.15% and 5.67%, respectively. During the periods 2008 to 2009 and 2009 to 2010, the positive pressure from the increasing market prices was greater, or stronger than the offsetting, or negative, pressure from the decreased number of shares outstanding. During the periods 2008 to 2009 and 2009 to 2010, the market price of Target's common shares increased by 64.33% and 6.01%, respectively. During the periods 2008 to 2009 and 2009 to 2010, the number of common shares outstanding decreased by 1.07% and 5.45%, respectively. These changes in the company's market capitalization should be construed as news and should be investigated further. One reasonable question that should be asked is: For what reason were the shares, or approximately 6.47% of 2008's outstanding shares, repurchased during the period 2008 through 2010? Was it part of earlier planned program, or were they repurchased to reduce the supply of shares available in the equity market and thereby the market price of the shares? (Note: The answer to this question can be found, in part, by reading the company's annual reports.) 2. Similarly, from 2008 through 2010, the company's book value from year to year. In general, and assuming that everything else remains constant, this behavior should have tended to the company's market-to-book (M/B) ratio. However, over time, Target's M/B ratio had increased, which suggests that the percentage increase in the market price had been than the percentage increase in the company's book value. Because the denominator of both the market price per share and the book value per share ratios is the number of shares outstanding, the trend of the M/B ratio indicates which of the following? The market placed an increasing value on the portion of the company owned by the common shareholders. The market placed an increasing value on the portion of the company owned by the creditors and debtholders. The market placed a decreasing value on the portion of the company owned by the common shareholders. 3. Target's earnings per share (EPS) ratio, which is calculated by dividing its by the number of common shares outstanding, exhibited a consistently increasing trend, growing by between 2008 and 2009 and by between 2009 and 2010. 4. From 2008 through 2010, Target's price-to-earnings (P/E) ratio exhibited an inconsistent trend. Which of the following phenomena contributed to this pattern? Check all that apply. Between 2009 and 2010, the market price per share of Target's common stock increased by a greater percentage than that exhibited by its EPS. Between 2008 and 2009, the market price per share of Target's common stock increased by a greater percentage than that exhibited by its EPS. Between 2009 and 2010, Target's EPS increased by a greater percentage than the market price of its common shares