Question 1

Using the most recent three years of available data, compute Wal-Marts and Targets degree of operating leverage. You will have to use the formula, percentage change in pretax income divided by percentage change in revenues. Show your work.

Question 2

Using the last three years of available data, compute Wal-Marts and Targets degree of financial leverage. You will have to use the formula, percentage change in net income divided by percentage change in pretax income (EBIT). Show your work.

Question 3

With each company, multiply the degree of financial leverage times the degree of operating leverage to determine the degree of combined leverage for the two periods.

Question4

Compare the leverage ratios. Did the degrees of leverage stay the same? Explain the differences between the two periods.

https://corporate.target.com/annual-reports/2013/10-K/form-10-K

http://stock.walmart.com/investors/financial-information/annual-reports-and-proxies/default.aspx