Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ompute ROA, Profit Margin, and Asset Turnover Refer to the financial information for Target Corporation, presented below: Target Corporation Balance Sheets ($ millions) January 28,

ompute ROA, Profit Margin, and Asset Turnover Refer to the financial information for Target Corporation, presented below:

Target Corporation Balance Sheets
($ millions) January 28, 2012 January 29, 2011
Assets
Cash and cash equivalents $794 $1,712
Accounts receivable, net 5,927 6,153
Inventory 7,918 7,596
Other current assets 1,810 1,752
Total current assets 16,449 17,213
Property and equipment, net 29,149 25,493
Other noncurrent assets 1,032 999
Total assets $46,630 $43,705
Liabilities and shareholders investment
Accounts payable $6,857 $6,625
Accrued liabilities 3,644 3,326
Current portion of long-term debt and notes payable 3,786 119
Total current liabilities 14,287 10,070
Long-term debt 13,697 15,607
Deferred income taxes 1,191 934
Other noncurrent liabilities 1,634 1,607
Total shareholders investment 15,821 15,487
Total liabilities and shareholders investment $46,630 $43,705

Target Corporation Income Statement
($ millions) Fiscal year ended January 28, 2012
Sales $70,466
Net credit card revenues 1,399
Total revenues 71,865
Cost of sales 47,860
Selling, general and administrative expenses 14,106
Credit card expenses 446
Depreciation and amortization 2,131
Earnings before interest expense and income taxes 7,322
Net interest expense 866
Earnings before income taxes 6,456
Provision for income taxes 1,527
Net earnings $4,929

a. Compute its return on assets (ROA) for the fiscal year ending January 28, 2012. Interest income for this year was $3 million, so interest expense was $869 million. Assume a statutory tax rate of 35%. (Round your answers to one decimal place.) Return on Assets = Answer

% b. Disaggregate ROA into profit margin (PM) and asset turnover (AT). (Round your answers to one decimal place.) Profit Margin = Answer

% Asset Turnover = Answer

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions