The Business Application cases for chapters 3 through 8 are based on the Form 10-K for Target Corp. The cases allow you to apply the concepts from the text to a live case. The text Business Application cases reference the 2018 Fiscal Year reports, but we will use the more current 2021 Fiscal Year reports. You will find the complete 10-K report in a pdf file as well as an excel workbook with the financial statements posted on the Canvas course site for convenience. But I encourage you to locate them either through the SEC Edgar database (See Appendix A, Chapter 3 in the text), or by going to the Target Investor Relations web site.

Use the Target Corporation Form 10-K to answer the following questions related to Targets 2021 Fiscal Year. Note that Targets Fiscal Year ends in late January or early February, so the 2021 Fiscal Year ends January 29, 2022. You will need to use the financial statements as well as notes to the financial statements to answer the questions. Show your calculations and extend all decimal points at least 2 places.

a) What percentage of Targets total revenues end up as net earnings for the most recent year? (Hint: use the Statement of Operations) b) What percentage of Targets sales go to pay for the costs of the goods being sold? (Hint: use the Statement of Operations) c) Calculate the Cost of Sales and the Gross Margin as a percentage of Targets Sales for the 2021, 2020 and 2019 Fiscal Years. Comment on the changes and the significance of changes in these ratios. (Hint: use the Statement of Operations) d) What costs does Target include in its Cost of Sales account? (Hint: use the Notes to the Financial Statements starting on page 40 of the 10-K) e) When does Target recognize revenue from the sale of gift cards? (Hint: use the Notes to the Financial Statements starting on page 40 of the 10-K)

Consolidated Statements of Operations - USD (\$) \$ in Millions Total revenue Cost of sales Gross Profit Selling, general and administrative expenses Depreciation and amortization (exclusive of depreciation included in cost of sales) Operating income Net interest expense \begin{tabular}{rrr} 2,344 & 2,230 & 2,357 \\ \hline 8,946 & 6,539 & 4,658 \\ 421 & 977 & 477 \\ (382) & 16 & (9) \\ \hline \end{tabular} Earnings from continuing operations before income taxes Provision for income taxes Net earnings from continuing operations Discontinued operations, net of tax Net earnings \begin{tabular}{rrr} 8,907 & 5,546 & 4,190 \\ 1,961 & 1,178 & 921 \\ \hline 6,946 & 4,368 & 3,269 \\ 0 & 0 & 12 \\ \hline $6,946 & $4,368 & $3,281 \end{tabular} 2d and outstanding as of January 29, 2022; 500,877,129 shares issued and outstanding as of January 30, 2021. Preferred Stock Authorized 5,000,000 shares, \$0.01 par value; no shares were issued or outstanding during any period presented. Consolidated Statements of Cash Flows - USD ($)$inMillions Jan. 29,2022 Jan. 30,2021 Feb. 01, 2020 Operating activities Net earnings $6,946$4,368$3,281 Earnings from discontinued operations, net of tax Net earnings from continuing operations \begin{tabular}{rrr} 0 & 0 & 12 \\ \hline 6,946 & 4,368 & 3,269 \end{tabular} Adjustments to reconcile net earnings to cash provided by operations: Depreciation and amortization Share-based compensation expense Deferred income taxes Gain on Dermstore sale Loss on debt extinguishment Noncash losses / (gains) and other, net Changes in operating accounts: Inventory Other assets Accounts payable Accrued and other liabilities Cash provided by operating activities-continuing operations Cash provided by operating activities-discontinued operations Cash provided by operating activities \begin{tabular}{rrrr} 0 & 0 & 18 \\ \hline 8,625 & 10,525 & 7,117 \end{tabular} Investing activities Expenditures for property and equipment (3,544)(2,649)(3,027) Proceeds from disposal of property and equipment Proceeds from Dermstore sale Other investments Cash required for investing activities Financing activities Additions to long-term debt Reductions of long-term debt Dividends paid Repurchase of stock Stock option exercises Cash required for financing activities Net (decrease) / increase in cash and cash equivalents \begin{tabular}{rrr} 27 & 42 & 63 \\ 356 & 0 & 0 \\ 7 & 16 & 20 \\ \hline(3,154) & (2,591) & (2,944) \end{tabular} Cash and cash equivalents at beginning of period \begin{tabular}{rrr} 8,511 & 2,577 & 1,556 \\ \hline \end{tabular} Cash and cash equivalents at end of period 5,911 8,511 2,577