A Liquidity Assessment of Target Corporation Inc.

2. A liquidity assessment of Target Corporation Inc. Aa Aa A Financial Ratio Analysis of Target Corporation A Liquidity Assessment Assume that you are a prospective business partner of Target Corporation (TGT), a retailer of "everyday essentials and fashionable, differentiated merchandise at discounted prices," and are interested in the company's historical and current financial activities and performance. Use the following financial data for Target to complete and conduct your financial ratio analysis. Then answer the questions that follow. Remember, the results of a ratio analysis often identify issues requiring additional investigation Target Corporation Selected Income Statement, Balance Sheet, and Related Data1 Income Statement Sales Less: Cost of goods sold Gross profit Less: Selling, general, and administrative expenses Less: Other expenses Earnings before interest and taxes (EBIT) Less: Interest expense Earnings before taxes (EBT) Less: Taxes Net income Less: Common dividends paid Dividends per share 2008 $65,786,000,000 $63,435,000,000 $62,884,000,000 44,157,000,000 18,727,000,000 12,954,000,000 1,609,000,000 4,402,000,000 866,000,000 3,536,000,000 1,322,000,000 2010 2009 45,725,000,000 20,061,000,000 13,469,000,000 860,000,000 5,252,000,000 757,000,000 4,495,000,000 1,575,000,000 44,062,000,000 19,373,000,000 13,078,000,000 1,521,000,000 4,673,000,000 801,000,000 3,872,000,000 1,384,000,000 $2,920,000,000 $2,488,000,000 $2,214,000,000 609,000,000 496,000,000 465,000,000 $0.92 $0.67 $0.62 Given Target's financial data, answer the following questions: Does Target have sufficient liquid resources to pay its other existing creditors for obligations due within the next 12 months? Target Corporation Liquidity Ratios Compute the current and quick ratios for 2008 through 2010 and evaluate the behavior of the ratios and the related accounts in Target's financial statements Current ratio 2010 2009 2008 Quick ratio 2010 2009 2008 1. Which of the following statements are correct? Check all that apply In general, creditors will prefer high current and quick ratios to low current and quick ratios pattern, increasing between 2008 and 2009 and decreasing between 2009 and 2010 exhibited a decreasing trend, but the trend for the quick ratios is increasing The cash and marketable securities and other current asset balances exhibit a mixed or variable The ratio data for Target indicates that over the period of 2008-2010, its current ratios have 2. Which of the following statements are correct? Check all that apply Although they should not be interpreted in isolation, it is reasonable to conclude that unfavorable liquidity ratios will tend to increase the market price of Target's shares, all other considerations remaining constant. Target's actual liquidity is probably more accurately reflected by its quick ratio than by its current ratio. The difference between the two ratios is attributable to its inventory holdings. Target's inventory is probably relatively illiquid, compared to its cash and marketable security and receivables holdings, and should not be counted on to pay immediately due bills The quick ratio data suggest that in 2008 and 2009 Target had less than a dollar's worth of current assets available to repay a dollar's worth of outstanding accounts payable The three-year trend of Target's current ratios can be explained by its increasing cash and other current asset balances and decreasing other current liability balances Target's current increasing ratio is as much a result of its increasing current assets as it is the result of its decreasing current liabilities balances 2. A liquidity assessment of Target Corporation Inc. Aa Aa A Financial Ratio Analysis of Target Corporation A Liquidity Assessment Assume that you are a prospective business partner of Target Corporation (TGT), a retailer of "everyday essentials and fashionable, differentiated merchandise at discounted prices," and are interested in the company's historical and current financial activities and performance. Use the following financial data for Target to complete and conduct your financial ratio analysis. Then answer the questions that follow. Remember, the results of a ratio analysis often identify issues requiring additional investigation Target Corporation Selected Income Statement, Balance Sheet, and Related Data1 Income Statement Sales Less: Cost of goods sold Gross profit Less: Selling, general, and administrative expenses Less: Other expenses Earnings before interest and taxes (EBIT) Less: Interest expense Earnings before taxes (EBT) Less: Taxes Net income Less: Common dividends paid Dividends per share 2008 $65,786,000,000 $63,435,000,000 $62,884,000,000 44,157,000,000 18,727,000,000 12,954,000,000 1,609,000,000 4,402,000,000 866,000,000 3,536,000,000 1,322,000,000 2010 2009 45,725,000,000 20,061,000,000 13,469,000,000 860,000,000 5,252,000,000 757,000,000 4,495,000,000 1,575,000,000 44,062,000,000 19,373,000,000 13,078,000,000 1,521,000,000 4,673,000,000 801,000,000 3,872,000,000 1,384,000,000 $2,920,000,000 $2,488,000,000 $2,214,000,000 609,000,000 496,000,000 465,000,000 $0.92 $0.67 $0.62 Given Target's financial data, answer the following questions: Does Target have sufficient liquid resources to pay its other existing creditors for obligations due within the next 12 months? Target Corporation Liquidity Ratios Compute the current and quick ratios for 2008 through 2010 and evaluate the behavior of the ratios and the related accounts in Target's financial statements Current ratio 2010 2009 2008 Quick ratio 2010 2009 2008 1. Which of the following statements are correct? Check all that apply In general, creditors will prefer high current and quick ratios to low current and quick ratios pattern, increasing between 2008 and 2009 and decreasing between 2009 and 2010 exhibited a decreasing trend, but the trend for the quick ratios is increasing The cash and marketable securities and other current asset balances exhibit a mixed or variable The ratio data for Target indicates that over the period of 2008-2010, its current ratios have 2. Which of the following statements are correct? Check all that apply Although they should not be interpreted in isolation, it is reasonable to conclude that unfavorable liquidity ratios will tend to increase the market price of Target's shares, all other considerations remaining constant. Target's actual liquidity is probably more accurately reflected by its quick ratio than by its current ratio. The difference between the two ratios is attributable to its inventory holdings. Target's inventory is probably relatively illiquid, compared to its cash and marketable security and receivables holdings, and should not be counted on to pay immediately due bills The quick ratio data suggest that in 2008 and 2009 Target had less than a dollar's worth of current assets available to repay a dollar's worth of outstanding accounts payable The three-year trend of Target's current ratios can be explained by its increasing cash and other current asset balances and decreasing other current liability balances Target's current increasing ratio is as much a result of its increasing current assets as it is the result of its decreasing current liabilities balances