REQUIREMENTS: Your report should be single-spaced in Times New Roman 12-point font with 1 margins on each side. All individuals in the group must be stated on the first page. Your report should consist of: (1) text, (2) a neatly formatted appendix that clearly shows your ratio calculations so that they can be re-performed by the grader. Note: if you do not show your work, you will not receive partial credit for incorrect answers. 1. Inventory analysis: a. Calculate Targets Inventory turnover for the past 2 years (round to 4 decimal places). Has it increased or decreased? What does this imply? 2. Fixed asset analysis: b. Calculate Targets PP&E turnover for the past 2 years (round to 4 decimal places). Has it increased or decreased? What does this imply? c. Calculate the percent used up of Targets depreciable assets for the past 3 years (round to 4 decimal places). What does this information tell you about future capital expenditures? Did this ratio increase or decrease from fiscal 2020 to 2021? Interpret the change. d. Calculate the estimated useful life of Targets depreciable assets for the past 3 years (round to 4 decimal places). (Hint: Target discloses their total depreciation and amortization expense, including the amounts within Cost of Sales, in the MD&A; Use this number). What does this estimated useful life imply about the mix of Targets assets? What does the change in the average life from fiscal 2020 to 2021 imply about the change in the mix of assets? 3. Leases: a. Use the lease footnote to calculate the discount rate implied by Targets finance leases. (Hint: Create the long-term capital lease payment schedule the same way we did in class: Assume that the payments made in 2027 and beyond are the same amount as in 2026 for as long as possible, with the final year containing the remainder.) b. Target discloses their own estimate of the weighted average discount rate on finance leases in the lease footnote. How does the discount rate you calculated above compare to Targets estimated rate? What is Targets incentive to over-estimate this rate (note this is a general question it does not mean that Target actually did over-estimate the rate). c. Use the lease footnote and the discount rate you calculated in part 2.a. to calculate the present value of the operating leases. (Hint: Like we did in class, treat operating lease payments beyond 2026 as an annuity in the amount of 2026s payment for the exact number of years it is possible to make this payment.) d. How does your estimate of operating lease liabilities compare to Targets calculation of operating lease liabilities? Give a possible reason why they differ. e. The lease footnote discloses the fiscal 2021 operating cash flows from operating leases (think of this number as the rent expense on operating leases). If we truly converted the operating leases to financing leases, by what percentage would Targets 2021 operating cash flow change (hint: use the discount rate you calculated in part 2.a.)? Ignore tax.