please answer all parts and note that there can be multiple correct answers for 1 and 2

2. A liquidity assessment of Target Corporation Inc. A Financial Ratio Analysis of Target Corporation A Liquidity Assessment Assume that you are an existing bondholder of Target Corporation (TGT), a retailer of "everyday essentials and fashionable, differentiated merchandise at discounted prices, and are interested in the company's historical and current financial activities and performance. Use the following financial data for Target to complete and conduct your financial ratio analysis. Then answer the questions that follow. Remember, the results of a ratio analysis often identify issues requiring additional Investigation. Target Corporation Selected Income Statement, Balance Sheet, and Related Data! Income Statement 2010 2009 2008 Sales $65,786,000,000 $62,881,000,000 $63,435,000,000 44,062,000,000 44,157,000,000 19,373,000,000 18,727,000,000 13,078,000,000 12,954,000,000 Less: Cost of goods sold Gross profit Less: Selling, general, and administrative expenses Less: Other expenses Earnings before interest and taxes (EBIT) Less: Interest expense Earnings before taxes (EBT) Less: Taxes 45,725,000,000 20,061,000,000 13,469,000,000 860,000,000 5,252,000,000 757,000,000 4,495,000,000 1,575,000,000 1,609,000,000 4,402,000,000 866,000,000 3,536,000,000 1,521,000,000 4,673,000,000 801,000,000 3,872,000,000 1,384,000,000 $2,488,000,000 496,000,000 SO. 1,322,000,000 Net income $2,920,000,000 $2,214,000,000 465,000,000 609,000,000 Less: Common dividends paid Dividends per share Balance Sheet Data $0.92 $0.62 2009 2010 2008 Assets: Cash and marketable securities $2,200,000,000 Receivables $1,712,000,000 6,153,000,000 7,596,000,000 1,752,000,000 $864,000,000 8,084,000,000 6,705,000,000 1,835,000,000 6,966,000,000 7.179,000,000 21079,000,000 18,424,000,000 Inventory Other current assets 17.488,000,000 Total current assets Net fixed assets 25,280 000 000 17 213,000,000 25,493,000,000 999,000,000 $43,705,000,000 829,000,000 Other long-term assets Total assets 25.756,000,000 862,000,000 $44, 106,000,000 $44,533,000,000 Liabilities and Equity: $6,511,000,000 3,120,000,000 1,696,000,000 Llabilities and Equity: Accounts payable Accruals Other current liabilities Total current liabilities Long-term liabilities Total debt Common stock Additional paid-in capital Retained earnings Total equity Total debt and equity Other Relevant Data Common shares outstanding Total dividends paid Market price per share $6,625,000,000 3,326,000,000 119,000,000 10,070,000,000 18,148,000,000 28,218,000,000 59,000,000 3,311,000,000 12,117,000,000 15,487,000,000 $43,705,000,000 11,327,000,000 17,859,000,000 29,186,000,000 62,000,000 $6,337,000,000 2,913,000,000 1,262,000,000 10,512,000,000 19,882,000,000 30,394,000,000 63,000,000 2,762,000,000 10,887,000,000 13,712,000,000 $44, 106,000,000 2,919,000,000 12,366,000,000 15,347,000,000 $44,533,000,000 744.644.454 752,712,464 704,038,218 609,000,000 496,000,000 465.000.000 $54.35 $51.27 $31.20 Compute the current and quick ratios for 2008 through 2010 and evaluate the behavior of the ratios and the related accounts in Target's financial Compute the current and quick ratios for 2008 through 2010 and evaluate the behavior of the ratios and the related accounts in Target's financial statements. (Note: Round all intermediate and final calculations to two decimal places.) Target Corporation Liquidity Ratlos Current ratio 2010 2009 2008 2 Quick ratio 2010 2009 2008 1. Which of the following statements are correct? Check all that apply. Target's sales are consistently decreasing, but its receivables are increasing and its inventory balances are decreasing The cash and marketable securities and other current asset balances exhibit a mixed or variable pattern, increasing between 2008 and 2009 and decreasing between 2009 and 2010. In general, creditors will prefer high current and quick ratios to low current and quick ratios. 2. Which of the following statements are correct? Check all that apply. Among the factors decreasing Target's quick ratios are the year-to-year increases in the firm's inventory holdings and decreases in accounts receivable. The three-year trend of Target's current ratios can be explained by its increasing cash and other current asset balances and decreasing other current liability balances. Target's actual liquidity is probably more accurately reflected by its quick ratio than by its current ratio. The difference between the two ratios is attributable to its inventory holdings. Target's inventory is probably relatively illiquid, compared to its cash and marketable security and receivables holdings, and should not be counted on to pay immediately due bills. The quick ratio is the more rigorous test of Target's liquidity, compared to the current ratio. Therefore, it is reasonable to conclude that Target does not have a dollar's worth of immediately available current assets available to repay a dollar's worth of current liabilities that are due immediately. The quick ratio data suggest that in 2008 and 2009 Target had less than a dollar's worth of current assets available to repay a dollar's worth of outstanding accounts payable