Target Corporation: ROE

For the fiscal year ending January 31, 2012, Targets EBIT was $5,322,* and its tax rate was 34.3 percent. Its short-term borrowings were $3,786, and its long-term debt was $13,697. In addition, the firms book value of equity was $15,821.

For the fiscal year ending January 31, 2012 (2011), Target had total revenues of (in millions) $69,865 ($67,390) and net earnings of $2,929 ($2,920). Its total assets were $46,630 ($43,705) and its equity was $15,821 ($15,487).

1.Estimate Targets return on equity (ROE) for each of these two years, using the DuPont decomposition to indicate the profit margin, the asset turnover, and the firms financial leverage.

2.Why has the ROE changed?

3.How would you compare the ROE drivers for Walmart and Target?