Selected financial data of Target and Wal-Mart for a recent year are presented here (in millions).

Target Corporation

Wal-Mart Stores, Inc.

Income Statement Data for Year

Net sales (Credit Sales)

$67,390

$405,046

Cost of goods sold

45,725

304,657

Selling and administrative expenses

13,469

79,607

Interest expense

757

1,884

Other income (expense)

(2,944)

2,576

Income tax expense

1,575

7,139

Net income

$2,920

$14,335

Balance Sheet Data (End of Year)

Current assets

$17,213

$ 48,331

Noncurrent assets

26,492

122,375

Total assets

$43,705

$170,706

Current liabilities

$10,070

$ 55,561

Long-term debt

18,148

44,396

Total stockholders' equity

15,487

70,749

Total liabilities and stockholders' equity

$43,705

$170,706

Beginning-of-Year Balances

Total assets

$44,533

$163,429

Total stockholders' equity

15,347

65,285

Current liabilities

11,327

55,390

Total liabilities

29,186

98,144

Other Data

Average net receivables

$6,560

$4,025

Average inventory

7,388

33,836

Net cash provided by operating activities

5,271

26,249

Instructions: (Expect slight differences than printed solutions manual due to significant digits in calcuations.

(a)(1) Compute the current ratio for each company.

Target Current ratio

current asset

=

17,213

=

1.7

to 1

current liability

10,070

Wal-Mart Current ratio

current asset

=

Amount

=

Formula

to 1

current liability

Amount

(a)(2) Compute the receivables turnover for each company.

Target Receivables turnover

Credit sales

=

Amount

=

Formula

Average net receivable

Amount

Wal-Mart Receivables turnover

Credit sales

=

Amount

=

Formula

Average net receivable

Amount

(a)(3) Compute the average collection period for each company.

Target Average collection period

365 days

=

Number

=

Formula

Receivables turnover

Amount

Wal-Mart Average collection period

365 days

=

Number

=

Formula

Receivables turnover

Amount

(a)(4) Compute the inventory turnover for each company.

Target Inventory turnover

Cost of goods sold

=

Amount

=

Formula

Average inventory

Amount

Wal-Mart Inventory turnover

Cost of goods sold

=

Amount

=

Formula

Average inventory

Amount

(a)(5) Compute the days in inventory for each company.

Target Days in inventory

365 days

=

Number

=

Formula

Inventory turnover

Amount

Wal-Mart Days in inventory

365 days

=

Number

=

Formula

Inventory turnover

Amount

(a)(6) Compute the profit margin for each company.

Target Profit margin

Net income

Amount

=

Formula

Net sales

Amount

Wal-Mart Profit margin

Net income

Amount

=

Formula

Net sales

Amount

(a)(7) Compute the asset turnover ratio for each company.

Target Asset turnover

Net sales

=

Amount

=

Formula

Average assets

Amount

Wal-Mart Asset turnover

Net sales

=

Amount

=

Formula

Average assets

Amount

(a)(8) Compute the return on assets ratio for each company.

Target Return on assets

Net income

=

Amount

=

Formula

Average assets

Amount

Wal-Mart Return on assets

Net income

=

Amount

=

Formula

Average assets

Amount

(a)(9) Compute the Debt to total assets ratio for each company.

Target Debt to total assets

Total debt

=

Amount

=

Formula

Total assets

Amount

Wal-Mart Debt to total assets

Total debt

=

Amount

=

Formula

Total assets

Amount

(b)(1) Compare the liquidity of the two companies.

Enter text answer here.

(b)(2) Compare the profitability of the two companies.

Enter text answer here.

(b)(3) Compare the solvency of the two companies.

Enter text answer here.