Page of 4 ZOOM + Instructions: a. Calculate the following ratios for both Target and Walmart for 2021 and 2020: The financial statements are provided on the "Walmart Financials" and "Target Financials" tabs Liquidity: 1. Current ratio Current assets divided by current liabilities 2. Quick ratio (Cash + marketable securities + accounts receivable) / current liabilities If the company has marketable securities, they would be listed in the current asset section right below cash) Profitability 3. Net margin Net income divided by total revenue 4. Operating margin Operating income divided by total revenue 5. Gross margin Gross profit = sales minus cost of sales Gross margin = gross profit divided by sales Debt 6. Debt ratio (liabilities, divided by total assets 7. Debt to equity ratio Total debt (liabilities) divided by total equity b. Comment on which company has better liquidity, better profitability, and less debt. c. Comment on whether each company has improved or worsened its liquidity, profitability, and debt. Walmart Income Statement (amounts in millions) Year Ending 2021 2020 2019 555,233 3,918 559,151 519,926 4,038 523,964 510,329 4,076 514,405 420,315 116,288 22,548 394,605 108,791 20,568 385,301 107,147 21,957 Revenues Net sales Membership and other income Total revenue Costs and expenses Cost of sales Operating, selling & administrative expenses Operating income Interest: Debt Finance, capital lease and financing Interest income Interest (net) Other (gains and losses Income before taxes Income taxes Noncontrolling interest Consolidated net income 1,976 339 (121) 2,194 (210) 20,564 6,858 196 13,510 2,262 337 (189) 2,410 (1,958) 20,116 4,915 320 14,881 1,975 371 (217) 2,129 8,368 11,460 4,281 509 6,670 Walmart Balance Sheet As of January 31, 2021 2020 Assets Current Assets: Cash and cash equivalents Receivables, net Inventories Prepaid expenses and other Total current assets 17,741 6,516 44,949 20,861 90,067 9,465 6,284 44,435 1,622 61,806 Property and equipment, net Leasing right of use assets Goodwill Other long term assets Total assets 92,201 17,647 28,983 23,598 252,496 105,208 21,841 31,073 16,567 236,495 Current liabilities Short term notes payable Accounts payable Accrued liabilities Accrued income taxes Long term debt due within one year Lease obligations due within one year Total current liabilities 224 49,141 37,966 242 3,115 1,957 92,645 575 46,973 22,296 280 5,362 2,304 77,790 Long term debt Long term lease obligations Deferred income taxes and other Total liabilities 41,194 16,756 14,370 164,965 43,714 20,478 12,961 154,943 Equity Common stock Capital in excess of par value Retained earnings Accumulated other comprehensive loss Noncontrolling interest Total equity 282 284 3,646 3,247 88,763 83,943 (11,766) (12,805) 6,606 6,883 87,531 81,552 Total liabilities and equity 252,496 236,495 Target Income Statement (amounts in millions) Year Ending 2021 2020 2019 92,400 1,161 93,561 77,130 982 78,112 74,433 923 75,356 Revenues Net sales Membership and other income Total revenue Costs and expenses Cost of sales Operating, selling & administrative expenses Depreciation and amortization Operating income Net interest expense Net other (income) expense Income before taxes Income taxes Net earnings from continuing operations 66,177 18,615 2,230 6,539 977 16 5,546 1,178 4,368 54,864 16,233 2,357 4,658 477 (9) 4,190 921 3,269 53,299 15,723 2,224 4,110 461 (27) 3,676 746 2.930 Target Balance Sheet As of January 31, 2021 2020 Assets Current Assets: Cash and cash equivalents Inventories Other current assets Total current assets 8,511 10,653 1,592 20,756 2,577 8,992 1,333 12,902 Property and equipment Land Buildings and improvements Fixtures and equipment Computer hardware and software Construction-in-progress Accumulated depreciation Operating lease assets Other noncurrent assets Total assets 6,141 31,557 5,914 2,765 780 (20,278) 2,227 1,386 51.248 6,036 30,603 6,083 2,692 533 (19,664) 2,236 1,358 42.779 Current liabilities Accounts payable Accrued and other current liabilities Current portion of long term debt Total current liabilities 12,859 6,122 1,144 20,125 9,920 4,406 161 14,487 Long term debt and other borrowings Noncurrent operating lease liabilities Deferred income taxes and other Other noncurrent liabilities Total liabilities 11,536 2,218 990 1,939 36,808 11,338 2,275 1,122 1,724 30,946 42 Equity Common stock Capital in excess of par value Retained earnings Accumulated other comprehensive loss Total equity 6,329 8,825 (756) 14,440 42 6,226 6,433 (868) 11,833 Total liabilities and equity 51,248 42.779 Page of 4 0 ZOOM + Walmart 2021 2020 Target 2021 2020 1. Current ratio 2. Quick ratio 3. Net margin Operating margin Gross margin 6. Debt ratio 7. Debt to assets ratio Liquidity Which company has better liquidity? Has Walmart's liquidity improved or worsened? Has Target's liquidity improved or worsened? Profitability Which company has better Iprofitability? Has Walmart's profitability improved or worsened? Has Target's profitability improved or ned? Debt Which company has more debt? Has Walmart's debt gotten larger or smaller? Has Target's debt gotten larger or smaller