Question
Analysis and Interpretation of Profitability Balance sheets and income statements for Target Corporation follow. Income Statement For Fiscal Years Ended ($ millions) 2008 2007 2006
Analysis and Interpretation of Profitability Balance sheets and income statements for Target Corporation follow.
Income Statement | |||
---|---|---|---|
For Fiscal Years Ended ($ millions) | 2008 | 2007 | 2006 |
Sales | $ 61,471 | $ 57,878 | $ 51,271 |
Credit card revenues | 1,896 | 1,612 | 1,349 |
Total revenues | 63,367 | 59,490 | 52,620 |
Cost of sales | 41,895 | 39,399 | 34,927 |
Selling, general and administrative expenses | 13,704 | 12,819 | 11,185 |
Credit card expenses | 837 | 707 | 776 |
Depreciation and amortization | 1,659 | 1,496 | 1,409 |
Earnings before interest and income taxes | 5,272 | 5,069 | 4,323 |
Net interest expense | 647 | 572 | 463 |
Earnings before income taxes | 4,625 | 4,497 | 3,860 |
Provisions for income taxes | 1,776 | 1,710 | 1,452 |
Net earnings | $ 2,849 | $ 2,787 | $ 2,408 |
Balance Sheet | ||
---|---|---|
($ millions, except footnotes) | February 2, 2008 | February 3, 2007 |
Assets | ||
Cash and cash equivalents | $ 2,450 | $ 813 |
Credit card receivables | 8,054 | 6,194 |
Inventory | 6,780 | 6,254 |
Other current assets | 1,622 | 1,445 |
Total current assets | 18,906 | 14,706 |
Property and equipment | ||
Land | 5,522 | 4,934 |
Buildings and improvements | 18,329 | 16,110 |
Fixtures and equipment | 3,858 | 3,553 |
Computer hardware and software | 2,421 | 2,188 |
Construction-in-progress | 1,852 | 1,596 |
Accumulated depreciation | (7,887) | (6,950) |
Property and equipment, net | 24,095 | 21,431 |
Other noncurrent assets | 1,559 | 1,212 |
Total assets | $ 44,560 | $ 37,349 |
Liabilities and shareholders' investment | ||
Accounts payable | $ 6,721 | $ 6,575 |
Accrued and other current liabilities | 3,097 | 3,180 |
Current portion of long-term debt and notes payable | 1,964 | 1,362 |
Total current liabilities | 11,782 | 11,117 |
Long-term debt | 15,126 | 8,675 |
Deferred income taxes | 470 | 577 |
Other noncurrent liabilities | 1,875 | 1,347 |
Shareholders' investment | ||
Common stock | 68 | 72 |
Additional paid-in-capital | 2,656 | 2,387 |
Retained earnings | 12,761 | 13,417 |
Accumulated other comprehensive income (loss) | (178) | (243) |
Total shareholders' investment | 15,307 | 15,633 |
Total liabilities and shareholders' equity | $ 44,560 | $ 37,349 |
a. Compute ROE for 2008.
Do not round until your final answer. Round your answers to two decimal places.
ROE =Answer
%
b. Confirm that ROE equals ROE computed using the component measures for profit margin, asset turnover, and financial leverage using: ROE = PM * AT * FL.
Compute the components of ROE.
Do not round until your final answer. Round answers to two decimal places. PM = Answer
% AT = Answer
FL = Answer
c. Compute adjusted ROA. Assume a tax rate of: 39.0%.
Round your answer to two decimal places. Adjusted ROA =Answer
%
Correct answer is 7.92%
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