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Leases What are the differences between operating and capital leases? Describe the particular leases of Target Corporation based on the liability section of Target Corporation's

Leases

What are the differences between operating and capital leases?

Describe the particular leases of Target Corporation based on the liability section of Target Corporation's balance sheet.

What impact have the leases had on Target Corporation's financial statements for the most recent year?

Discuss the advantages and disadvantages of leasing a building versus purchasing one.

Income statements

Period Ending

1/28/2017

1/30/2016

Total Revenue

$69,495,000

$73,785,000

Cost of Revenue

$48,872,000

$51,997,000

Gross Profit

$20,623,000

$21,788,000

Research and Development

$0

$0

Sales, General and Admin.

$13,356,000

$14,665,000

Non-Recurring Items

$0

$0

Other Operating Items

$2,298,000

$2,213,000

Operating Income

$4,969,000

$4,910,000

Additional income/expense items

$0

$620,000

Earnings Before Interest and Tax

$4,969,000

$5,530,000

Interest Expense

$1,004,000

$607,000

Earnings Before Tax

$3,965,000

$4,923,000

Income Tax

$1,296,000

$1,602,000

Minority Interest

$0

$0

Equity Earnings/Loss Unconsolidated Subsidiary

$0

$0

Net Income-Cont. Operations

$2,669,000

$3,321,000

Net Income

$2,737,000

$3,363,000

Net Income Applicable to Common Shareholders

$2,737,000

$3,363,000

Balance Sheet

Current Assets

Cash and Cash Equivalents

$2,512,000

$4,046,000

Short-Term Investments

$0

$0

Net Receivables

$0

$0

Inventory

$8,309,000

$8,601,000

Other Current Assets

$1,169,000

$1,483,000

Total Current Assets

$11,990,000

$14,130,000

Long-Term Assets

Long-Term Investments

$0

$0

Fixed Assets

$24,658,000

$25,217,000

Goodwill

$0

$0

Intangible Assets

$0

$0

Other Assets

$783,000

$915,000

Deferred Asset Charges

$0

$0

Total Assets

$37,431,000

$40,262,000

Current Liabilities

Accounts Payable

$10,989,000

$11,654,000

Short-Term Debt / Current Portion of Long-Term Debt

$1,718,000

$815,000

Other Current Liabilities

$1,000

$153,000

Total Current Liabilities

$12,708,000

$12,622,000

Long-Term Debt

$11,031,000

$11,945,000

Other Liabilities

$1,878,000

$1,915,000

Deferred Liability Charges

$861,000

$823,000

Misc. Stocks

$0

$0

Minority Interest

$0

$0

Total Liabilities

$26,478,000

$27,305,000

Stock-Holders Equity

Common Stocks

$46,000

$50,000

Capital Surplus

$5,661,000

$5,348,000

Retained Earnings

$5,884,000

$8,188,000

Treasury Stock

$0

$0

Other Equity

($638,000)

($629,000)

Total Equity

$10,953,000

$12,957,000

Total Liabilities & Equity

$37,431,000

$40,262,000

Cash Flow

Net Income

$2,737,000

$3,363,000

Cash Flow-Operating Activities

Depreciation

$2,298,000

$2,213,000

Net Income Adjustments

$508,000

($812,000)

Changes in Operating Activities

Accounts Receivable

$0

$0

Changes in Inventories

$293,000

($316,000)

Other Operating Activities

$36,000

$227,000

Liabilities

($543,000)

$579,000

Net Cash Flow-Operating

$5,436,000

$5,958,000

Cash flows-Investing Activities

Capital Expenditures

($1,547,000)

($1,438,000)

Investments

$28,000

$24,000

Other Investing Activities

$46,000

$1,922,000

Net Cash Flows-Investing

($1,473,000)

$508,000

Cash Flows-Financing Activities

Sale and Purchase of Stock

($3,485,000)

($3,183,000)

Net Borrowings

($664,000)

($85,000)

Other Financing Activities

$0

$0

Net Cash Flows-Financing

($5,497,000)

($4,630,000)

Effect of Exchange Rate

$0

$0

Net Cash Flow

($1,534,000)

$1,836,000

Financial Ratios

Liquidity Ratios

Current Ratio

94%

112%

Quick Ratio

29%

44%

Cash Ratio

20%

32%

Profitability Ratio

Gross Margin

30%

30%

Operating Margin

7%

7%

Pre-Tax Margin

6%

7%

Profit Margin

4%

5%

(www.nasdaq.com)

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