PART I:

a) Using the template provided, prepare a common-size Consolidated Statements of Financial Position;

b) Using the template provided, prepare a common-size Consolidated Statements of Operations;

c) Using the template provided, prepare all of the financial ratios including:

1. Liquidity ratios

2. Activity ratios

3. Leverage ratios

4. Profitability ratios

5. Market ratios

PART II:

Using the information from Part I, comment on the following financial elements of Target Corporation:

1. Short-term liquidity

2. Operating efficiency

3. Capital structure and long-term solvency

4. Profitability

5. Market Measures

TARGET CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION [ACTUAL CASE DATA: $ in Millions] February 2, 2008 ASSETS Current Assets: Cash and cash equivalents Short-term investments Total cash and short-term investments Accounts receivable, net Inventories, net Current deferred taxes Other current assets Total current assets Property, plant, and equipment Less: accumulated depreciation Net property, plant, and equipment Long-term investments Goodwill, net Other intangibles, net Other deferred taxes Other assets Total assets 2,450 2,450 8,054 6,780 556 1,066 18,906 31,982 (7,887) 24,095 60 148 1,351 44,560 February 3, 2007 813 813 6,194 6,254 427 1,018 14,706 28,381 (6,950) 21,431 60 152 1,000 37,349 TARGET CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION [ACTUAL CASE DATA: $ in Millions] LIABILITIES Current Liabilities: Accounts payable Short-term debt Current portion of long-term debt Accrued liabilities Income taxes payable Other current liabilities Total current liabilities Long-term debt Deferred income taxes payable Other deferred liabilities Other liabilities Total liabilities Minority interest STOCKHOLDERS' EQUITY Preferred stock Common stock, par value plus additional paid-in capital Retained earnings (accumulated deficit) Treasury stock Accumulated other comprehensive income (loss) Other stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity February 2, 2008 February 3, 2007 6,721 1,964 3,097 11,782 15,126 470 1,875 29,253 - 6,575 1,362 3,180 11,117 8,675 577 1,347 21,716 - 2,724 12,761 (178) 15,307 44,560 2,459 13,417 (243) 15,633 37,349 TARGET CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION [COMMON SIZE FINANCIAL STATEMENT: $ in Millions] February 2, 2008 ASSETS Current Assets: Cash and cash equivalents Short-term investments Total cash and short-term investments Accounts receivable, net Inventories, net Current deferred taxes Other current assets Total current assets Property, plant, and equipment Less: accumulated depreciation Net property, plant, and equipment Long-term investments Goodwill, net Other intangibles, net Other deferred taxes Other assets Total assets 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% February 3, 2007 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% TARGET CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION [COMMON SIZE FINANCIAL STATEMENT: $ in Millions] February 2, 2008 LIABILITIES Current Liabilities: Accounts payable Short-term debt Current portion of long-term debt Accrued liabilities Income taxes payable Other current liabilities Total current liabilities Long-term debt Deferred income taxes payable Other deferred liabilities Other liabilities Total liabilities Minority interest STOCKHOLDERS' EQUITY Preferred stock Common stock, par value plus additional paid-in capital Retained earnings (accumulated deficit) Treasury stock Accumulated other comprehensive income (loss) Other stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity February 3, 2007 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% TARGET CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS [ACTUAL CASE DATA: $ in Millions] 2007 Sales Credit Card Revenues Total Revenues Cost of Sales Selling, General and Administrative Expenses Credit Card Expenses Depreciation and Amortization Earnings Before Interest Expense and Income Taxes Net Interest Expense Earnings Before Income Taxes Provision for Income Taxes Net Earnings 2006 2005 61,471 1,896 63,367 41,895 13,704 837 1,659 5,272 647 4,625 1,776 2,849 57,878 1,612 59,490 39,399 12,819 707 1,496 5,069 572 4,497 1,710 2,787 51,271 1,349 52,620 34,927 11,185 776 1,409 4,323 463 3,860 1,452 2,408 Basic Earnings Per Share Diluted Earnings Per Share 3.37 3.35 3.23 3.21 2.73 2.71 Weighted average common shares outstanding: Basic Diluted 845.4 850.8 861.9 868.6 882 889.2 End of year stock price Dividends per share 57.05 0.54 62.03 0.46 54.17 0.38 TARGET CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS [COMMON SIZE FINANCIAL STATEMENT: $ in Millons] 2007 Sales Credit Card Revenues Total Revenues Cost of Sales Selling, General and Administrative Expenses Credit Card Expenses Depreciation and Amortization Earnings Before Interest Expense and Income Taxes Net Interest Expense Earnings Before Income Taxes Provision for Income Taxes Net Earnings 2006 2005 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% - - - Weighted average common shares outstanding: Basic Diluted 845.4 850.8 861.9 868.6 882 889.2 End of year stock price Dividends per share 57.05 0.54 62.03 0.46 54.17 0.38 Basic Earnings Per Share Diluted Earnings Per Share TARGET CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS [ACTUAL CASE DATA: $ in Millions] 2007 Operating Activities Net Earnings Reconciliation to Cash Flow Depreciation and amortization Share-based compensation expense Deferred income taxes Bad debt provision Loss on disposal of property and equipment, net Other non-cash items affecting earnings Changes in operating accounts related to cash: Accounts receivable originated at Target Inventory Other current assets Other noncurrent assets Accounts payable Accrued and other current liabilities Other noncurrent liabilities Other Cash flow provided by operations Investing Activities Expenditures for property, plant and equipment Proceeds from disposal of property and equipment Change in accounts receivable originated at third parties Other investements Cash flow required for investing activities Financing Activities Additions to short-term notes payable Reductions of short-term notes payable Additions to long-term debt Reductions of long-term debt Dividends paid Repurchase of stock Premiums on call options Stock option exercises and related tax benefit Other Cash flow provided/(required for) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year 2006 2005 2,849 2,787 2,408 1,659 73 (70) 481 28 52 1,496 99 (201) 380 53 (35) 1,409 93 (122) 466 70 (50) (602) (525) (139) 101 111 62 124 (79) 4,125 (226) (431) (30) 5 435 430 100 4,862 (244) (454) (28) (24) 489 421 2 15 4,451 (4,369) 95 (1,739) (182) (6,195) (3,928) 62 (683) (144) (4,693) (3,388) 58 (819) (4,149) 1,000 (500) 7,617 (1,326) (442) (2,477) (331) 210 (44) 3,707 1,637 813 1,256 (1,155) (380) (901) 181 (5) (1,004) (835) 1,648 913 (527) (318) (1,197) 231 (1) (899) (597) 2,245 Cash and cash equivalents at end of year 2,450 813 1,648 2007 Liquidity Ratios: Current ratio Quick ratio Cash flow liquidity Average collection period Days inventory held Days payable outstanding Cash conversion cycle Activity Ratios: Accounts receivable turnover Inventory turnover Payables turnover Fixed asset turnover Total asset turnover Leverage Ratios: Debt ratio Long-term debt to total capitalization Debt to equity Financial leverage (FL) Times interest earned Cash interest coverage Fixed charge coverage Cash flow adequacy Profitability Ratios: Gross profit margin Operating profit margin Net profit margin Cash flow margin Return on assets (ROA) or Return on investment (ROI) Return on equity (ROE) Cash return on assets Market Ratios: Earnings per share Price-to-earnings 2006 Dividend payout Dividend yield Using the information from Part I, comment on the following financial elements of Target 1. 2. 3. 4. 5. Short-term liquidity Operating efficiency Capital structure and long-term solvency Profitability Market Measures on the following financial elements of Target Corporation: TARGET CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION [ACTUAL CASE DATA: $ in Millions] February 2, 2008 ASSETS Current Assets: Cash and cash equivalents Short-term investments Total cash and short-term investments Accounts receivable, net Inventories, net Current deferred taxes Other current assets Total current assets Property, plant, and equipment Less: accumulated depreciation Net property, plant, and equipment Long-term investments Goodwill, net Other intangibles, net Other deferred taxes Other assets Total assets 2,450 2,450 8,054 6,780 556 1,066 18,906 31,982 (7,887) 24,095 60 148 1,351 44,560 February 3, 2007 813 813 6,194 6,254 427 1,018 14,706 28,381 (6,950) 21,431 60 152 1,000 37,349 TARGET CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION [ACTUAL CASE DATA: $ in Millions] LIABILITIES Current Liabilities: Accounts payable Short-term debt Current portion of long-term debt Accrued liabilities Income taxes payable Other current liabilities Total current liabilities Long-term debt Deferred income taxes payable Other deferred liabilities Other liabilities Total liabilities Minority interest STOCKHOLDERS' EQUITY Preferred stock Common stock, par value plus additional paid-in capital Retained earnings (accumulated deficit) Treasury stock Accumulated other comprehensive income (loss) Other stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity February 2, 2008 February 3, 2007 6,721 1,964 3,097 11,782 15,126 470 1,875 29,253 - 6,575 1,362 3,180 11,117 8,675 577 1,347 21,716 - 2,724 12,761 (178) 15,307 44,560 2,459 13,417 (243) 15,633 37,349 TARGET CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION [COMMON SIZE FINANCIAL STATEMENT: $ in Millions] February 2, 2008 ASSETS Current Assets: Cash and cash equivalents Short-term investments Total cash and short-term investments Accounts receivable, net Inventories, net Current deferred taxes Other current assets Total current assets Property, plant, and equipment Less: accumulated depreciation Net property, plant, and equipment Long-term investments Goodwill, net Other intangibles, net Other deferred taxes Other assets Total assets 5.5% 0.0% 5.5% 18.1% 15.2% 1.2% 2.4% 42.4% 71.8% -17.7% 54.1% 0.0% 0.1% 0.3% 0.0% 3.0% 100.0% February 3, 2007 2.2% 0.0% 2.2% 16.6% 16.7% 1.1% 2.7% 39.4% 76.0% -18.6% 57.4% 0.0% 0.2% 0.4% 0.0% 2.7% 100.0% TARGET CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION [COMMON SIZE FINANCIAL STATEMENT: $ in Millions] February 2, 2008 LIABILITIES Current Liabilities: Accounts payable Short-term debt Current portion of long-term debt Accrued liabilities Income taxes payable Other current liabilities Total current liabilities Long-term debt Deferred income taxes payable Other deferred liabilities Other liabilities Total liabilities Minority interest STOCKHOLDERS' EQUITY Preferred stock Common stock, par value plus additional paid-in capital Retained earnings (accumulated deficit) Treasury stock Accumulated other comprehensive income (loss) Other stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity February 3, 2007 15.1% 0.0% 4.4% 7.0% 0.0% 0.0% 26.4% 33.9% 1.1% 0.0% 4.2% 65.6% 0.0% 17.6% 0.0% 3.6% 8.5% 0.0% 0.0% 29.8% 23.2% 1.5% 0.0% 3.6% 58.1% 0.0% 0.0% 6.1% 28.6% 0.0% -0.4% 0.0% 34.4% 100.0% 0.0% 6.6% 35.9% 0.0% -0.7% 0.0% 41.9% 100.0% TARGET CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS [ACTUAL CASE DATA: $ in Millions] 2007 Sales Credit Card Revenues Total Revenues Cost of Sales Selling, General and Administrative Expenses Credit Card Expenses Depreciation and Amortization Earnings Before Interest Expense and Income Taxes Net Interest Expense Earnings Before Income Taxes Provision for Income Taxes Net Earnings 2006 2005 61,471 1,896 63,367 41,895 13,704 837 1,659 5,272 647 4,625 1,776 2,849 57,878 1,612 59,490 39,399 12,819 707 1,496 5,069 572 4,497 1,710 2,787 51,271 1,349 52,620 34,927 11,185 776 1,409 4,323 463 3,860 1,452 2,408 Basic Earnings Per Share Diluted Earnings Per Share 3.37 3.35 3.23 3.21 2.73 2.71 Weighted average common shares outstanding: Basic Diluted 845.4 850.8 861.9 868.6 882 889.2 End of year stock price Dividends per share 57.05 0.54 62.03 0.46 54.17 0.38 TARGET CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS [COMMON SIZE FINANCIAL STATEMENT: $ in Millons] 2007 Sales Credit Card Revenues Total Revenues Cost of Sales Selling, General and Administrative Expenses Credit Card Expenses Depreciation and Amortization Earnings Before Interest Expense and Income Taxes Net Interest Expense Earnings Before Income Taxes Provision for Income Taxes Net Earnings 2006 2005 97.0% 3.0% 100.0% 66.1% 21.6% 1.3% 2.6% 8.3% 1.0% 7.3% 2.8% 4.5% 97.3% 2.7% 100.0% 66.2% 21.5% 1.2% 2.5% 8.5% 1.0% 7.6% 2.9% 4.7% 97.4% 2.6% 100.0% 66.4% 21.3% 1.5% 2.7% 8.2% 0.9% 7.3% 2.8% 4.6% Basic Earnings Per Share Diluted Earnings Per Share 0.00 0.00 0.00 0.00 0.00 0.00 Weighted average common shares outstanding: Basic Diluted 845.4 850.8 861.9 868.6 882 889.2 End of year stock price Dividends per share 57.05 0.54 62.03 0.46 54.17 0.38 TARGET CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS [ACTUAL CASE DATA: $ in Millions] 2007 Operating Activities Net Earnings Reconciliation to Cash Flow Depreciation and amortization Share-based compensation expense Deferred income taxes Bad debt provision Loss on disposal of property and equipment, net Other non-cash items affecting earnings Changes in operating accounts related to cash: Accounts receivable originated at Target Inventory Other current assets Other noncurrent assets Accounts payable Accrued and other current liabilities Other noncurrent liabilities Other Cash flow provided by operations Investing Activities Expenditures for property, plant and equipment Proceeds from disposal of property and equipment Change in accounts receivable originated at third parties Other investements Cash flow required for investing activities Financing Activities Additions to short-term notes payable Reductions of short-term notes payable Additions to long-term debt Reductions of long-term debt Dividends paid Repurchase of stock Premiums on call options Stock option exercises and related tax benefit Other Cash flow provided/(required for) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year 2006 2005 2,849 2,787 2,408 1,659 73 (70) 481 28 52 1,496 99 (201) 380 53 (35) 1,409 93 (122) 466 70 (50) (602) (525) (139) 101 111 62 124 (79) 4,125 (226) (431) (30) 5 435 430 100 4,862 (244) (454) (28) (24) 489 421 2 15 4,451 (4,369) 95 (1,739) (182) (6,195) (3,928) 62 (683) (144) (4,693) (3,388) 58 (819) (4,149) 1,000 (500) 7,617 (1,326) (442) (2,477) (331) 210 (44) 3,707 1,637 813 1,256 (1,155) (380) (901) 181 (5) (1,004) (835) 1,648 913 (527) (318) (1,197) 231 (1) (899) (597) 2,245 Cash and cash equivalents at end of year 2,450 813 1,648 2007 2006 Liquidity Ratios: Current ratio Quick ratio Cash flow liquidity Average collection period Days inventory held Days payable outstanding Cash conversion cycle Activity Ratios: Accounts receivable turnover Inventory turnover Payables turnover Fixed asset turnover Total asset turnover Leverage Ratios: Debt ratio Long-term debt to total capitalization Debt to equity Financial leverage (FL) Times interest earned Cash interest coverage Fixed charge coverage Cash flow adequacy Profitability Ratios: Gross profit margin Operating profit margin Net profit margin Cash flow margin Return on assets (ROA) or Return on investment (ROI) Return on equity (ROE) Cash return on assets Market Ratios: Earnings per share Price-to-earnings 1.60 1.32 1.03 0.76 0.35 0.44 46 38 59 58 58 60 47 36 7.87 9.60 6.18 6.30 6.32 6.07 11.82% 13.00% 6.39% 7.46% 65.65% 58.14% 98.82% 55.49% 1.91 1.39 0.66 0.58 5.58 6.25 8.15 8.86 5.50 6.31 0.67 0.89 33.89% 33.77% 10.94% 11.04% 4.50% 4.68% 6.51% 8.17% 6.39% 7.46% 18.61% 17.83% 5.50% 2.18% 3.37 3.23 16.93 19.18 Dividend payout Dividend yield 16.02% 14.23% 0.95% 0.74% TARGET CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION [ACTUAL CASE DATA: $ in Millions] February 2, 2008 ASSETS Current Assets: Cash and cash equivalents Short-term investments Total cash and short-term investments Accounts receivable, net Inventories, net Current deferred taxes Other current assets Total current assets Property, plant, and equipment Less: accumulated depreciation Net property, plant, and equipment Long-term investments Goodwill, net Other intangibles, net Other deferred taxes Other assets Total assets 2,450 2,450 8,054 6,780 556 1,066 18,906 31,982 (7,887) 24,095 60 148 1,351 44,560 February 3, 2007 813 813 6,194 6,254 427 1,018 14,706 28,381 (6,950) 21,431 60 152 1,000 37,349 TARGET CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION [ACTUAL CASE DATA: $ in Millions] LIABILITIES Current Liabilities: Accounts payable Short-term debt Current portion of long-term debt Accrued liabilities Income taxes payable Other current liabilities Total current liabilities Long-term debt Deferred income taxes payable Other deferred liabilities Other liabilities Total liabilities Minority interest STOCKHOLDERS' EQUITY Preferred stock Common stock, par value plus additional paid-in capital Retained earnings (accumulated deficit) Treasury stock Accumulated other comprehensive income (loss) Other stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity February 2, 2008 February 3, 2007 6,721 1,964 3,097 11,782 15,126 470 1,875 29,253 - 6,575 1,362 3,180 11,117 8,675 577 1,347 21,716 - 2,724 12,761 (178) 15,307 44,560 2,459 13,417 (243) 15,633 37,349 TARGET CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION [COMMON SIZE FINANCIAL STATEMENT: $ in Millions] February 2, 2008 ASSETS Current Assets: Cash and cash equivalents Short-term investments Total cash and short-term investments Accounts receivable, net Inventories, net Current deferred taxes Other current assets Total current assets Property, plant, and equipment Less: accumulated depreciation Net property, plant, and equipment Long-term investments Goodwill, net Other intangibles, net Other deferred taxes Other assets Total assets 5.5% 0.0% 5.5% 18.1% 15.2% 1.2% 2.4% 42.4% 71.8% -17.7% 54.1% 0.0% 0.1% 0.3% 0.0% 3.0% 100.0% February 3, 2007 2.2% 0.0% 2.2% 16.6% 16.7% 1.1% 2.7% 39.4% 76.0% -18.6% 57.4% 0.0% 0.2% 0.4% 0.0% 2.7% 100.0% TARGET CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION [COMMON SIZE FINANCIAL STATEMENT: $ in Millions] February 2, 2008 LIABILITIES Current Liabilities: Accounts payable Short-term debt Current portion of long-term debt Accrued liabilities Income taxes payable Other current liabilities Total current liabilities Long-term debt Deferred income taxes payable Other deferred liabilities Other liabilities Total liabilities Minority interest STOCKHOLDERS' EQUITY Preferred stock Common stock, par value plus additional paid-in capital Retained earnings (accumulated deficit) Treasury stock Accumulated other comprehensive income (loss) Other stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity February 3, 2007 15.1% 0.0% 4.4% 7.0% 0.0% 0.0% 26.4% 33.9% 1.1% 0.0% 4.2% 65.6% 0.0% 17.6% 0.0% 3.6% 8.5% 0.0% 0.0% 29.8% 23.2% 1.5% 0.0% 3.6% 58.1% 0.0% 0.0% 6.1% 28.6% 0.0% -0.4% 0.0% 34.4% 100.0% 0.0% 6.6% 35.9% 0.0% -0.7% 0.0% 41.9% 100.0% TARGET CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS [ACTUAL CASE DATA: $ in Millions] 2007 Sales Credit Card Revenues Total Revenues Cost of Sales Selling, General and Administrative Expenses Credit Card Expenses Depreciation and Amortization Earnings Before Interest Expense and Income Taxes Net Interest Expense Earnings Before Income Taxes Provision for Income Taxes Net Earnings 2006 2005 61,471 1,896 63,367 41,895 13,704 837 1,659 5,272 647 4,625 1,776 2,849 57,878 1,612 59,490 39,399 12,819 707 1,496 5,069 572 4,497 1,710 2,787 51,271 1,349 52,620 34,927 11,185 776 1,409 4,323 463 3,860 1,452 2,408 Basic Earnings Per Share Diluted Earnings Per Share 3.37 3.35 3.23 3.21 2.73 2.71 Weighted average common shares outstanding: Basic Diluted 845.4 850.8 861.9 868.6 882 889.2 End of year stock price Dividends per share 57.05 0.54 62.03 0.46 54.17 0.38 TARGET CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS [COMMON SIZE FINANCIAL STATEMENT: $ in Millons] 2007 Sales Credit Card Revenues Total Revenues Cost of Sales Selling, General and Administrative Expenses Credit Card Expenses Depreciation and Amortization Earnings Before Interest Expense and Income Taxes Net Interest Expense Earnings Before Income Taxes Provision for Income Taxes Net Earnings 2006 2005 97.0% 3.0% 100.0% 66.1% 21.6% 1.3% 2.6% 8.3% 1.0% 7.3% 2.8% 4.5% 97.3% 2.7% 100.0% 66.2% 21.5% 1.2% 2.5% 8.5% 1.0% 7.6% 2.9% 4.7% 97.4% 2.6% 100.0% 66.4% 21.3% 1.5% 2.7% 8.2% 0.9% 7.3% 2.8% 4.6% Basic Earnings Per Share Diluted Earnings Per Share 0.00 0.00 0.00 0.00 0.00 0.00 Weighted average common shares outstanding: Basic Diluted 845.4 850.8 861.9 868.6 882 889.2 End of year stock price Dividends per share 57.05 0.54 62.03 0.46 54.17 0.38 TARGET CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS [ACTUAL CASE DATA: $ in Millions] 2007 Operating Activities Net Earnings Reconciliation to Cash Flow Depreciation and amortization Share-based compensation expense Deferred income taxes Bad debt provision Loss on disposal of property and equipment, net Other non-cash items affecting earnings Changes in operating accounts related to cash: Accounts receivable originated at Target Inventory Other current assets Other noncurrent assets Accounts payable Accrued and other current liabilities Other noncurrent liabilities Other Cash flow provided by operations Investing Activities Expenditures for property, plant and equipment Proceeds from disposal of property and equipment Change in accounts receivable originated at third parties Other investements Cash flow required for investing activities Financing Activities Additions to short-term notes payable Reductions of short-term notes payable Additions to long-term debt Reductions of long-term debt Dividends paid Repurchase of stock Premiums on call options Stock option exercises and related tax benefit Other Cash flow provided/(required for) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year 2006 2005 2,849 2,787 2,408 1,659 73 (70) 481 28 52 1,496 99 (201) 380 53 (35) 1,409 93 (122) 466 70 (50) (602) (525) (139) 101 111 62 124 (79) 4,125 (226) (431) (30) 5 435 430 100 4,862 (244) (454) (28) (24) 489 421 2 15 4,451 (4,369) 95 (1,739) (182) (6,195) (3,928) 62 (683) (144) (4,693) (3,388) 58 (819) (4,149) 1,000 (500) 7,617 (1,326) (442) (2,477) (331) 210 (44) 3,707 1,637 813 1,256 (1,155) (380) (901) 181 (5) (1,004) (835) 1,648 913 (527) (318) (1,197) 231 (1) (899) (597) 2,245 Cash and cash equivalents at end of year 2,450 813 1,648 2007 2006 Liquidity Ratios: Current ratio Quick ratio Cash flow liquidity Average collection period Days inventory held Days payable outstanding Cash conversion cycle Activity Ratios: Accounts receivable turnover Inventory turnover Payables turnover Fixed asset turnover Total asset turnover Leverage Ratios: Debt ratio Long-term debt to total capitalization Debt to equity Financial leverage (FL) Times interest earned Cash interest coverage Fixed charge coverage Cash flow adequacy Profitability Ratios: Gross profit margin Operating profit margin Net profit margin Cash flow margin Return on assets (ROA) or Return on investment (ROI) Return on equity (ROE) Cash return on assets Market Ratios: Earnings per share Price-to-earnings 1.60 1.32 1.03 0.76 0.35 0.44 46 38 59 58 58 60 47 36 7.87 9.60 6.18 6.30 6.32 6.07 11.82% 13.00% 6.39% 7.46% 65.65% 58.14% 98.82% 55.49% 1.91 1.39 0.66 0.58 5.58 6.25 8.15 8.86 5.50 6.31 0.67 0.89 33.89% 33.77% 10.94% 11.04% 4.50% 4.68% 6.51% 8.17% 6.39% 7.46% 18.61% 17.83% 5.50% 2.18% 3.37 3.23 16.93 19.18 Dividend payout Dividend yield 16.02% 14.23% 0.95% 0.74%