Question
Weighted Average Cost of Capital: Find 2016 financial statements for Target Store (1) Estimate the weights of capital (debt, preferred stock, and common stock) for
Weighted Average Cost of Capital: Find 2016 financial statements for Target Store
(1) Estimate the weights of capital (debt, preferred stock, and common stock) for the company.
(2) Estimate the before-tax and after-tax component cost of debt for the firm.
(3) Estimate the component cost of preferred stock (if applicable) for the firm.
(4) Estimate the component cost of common equity using CAPM for the firm.
(5) Compute the firms weighted average cost of capital (WACC). Discuss your findings.
Balance Sheet
All numbers in thousands
| Period Ending | 1/28/2017 | 1/30/2016 | 1/31/2015 |
| Current Assets | |||
| Cash And Cash Equivalents | 2,512,000 | 4,046,000 | 2,210,000 |
| Short Term Investments | - | - | - |
| Net Receivables | - | - | - |
| Inventory | 8,309,000 | 8,601,000 | 8,282,000 |
| Other Current Assets | 1,169,000 | 1,483,000 | 3,132,000 |
| Total Current Assets | 11,990,000 | 14,130,000 | 13,624,000 |
| Long Term Investments | - | - | - |
| Property Plant and Equipment | 24,658,000 | 25,217,000 | 25,952,000 |
| Goodwill | - | - | - |
| Intangible Assets | - | - | - |
| Accumulated Amortization | - | - | - |
| Other Assets | 783,000 | 915,000 | 1,596,000 |
| Deferred Long Term Asset Charges | - | - | - |
| Total Assets | 37,431,000 | 40,262,000 | 41,172,000 |
| Current Liabilities | |||
| Accounts Payable | 10,989,000 | 11,654,000 | 11,542,000 |
| Short/Current Long Term Debt | 1,718,000 | 815,000 | 91,000 |
| Other Current Liabilities | 1,000 | 153,000 | 103,000 |
| Total Current Liabilities | 12,708,000 | 12,622,000 | 11,736,000 |
| Long Term Debt | 11,031,000 | 11,945,000 | 12,634,000 |
| Other Liabilities | 1,878,000 | 1,915,000 | 1,645,000 |
| Deferred Long Term Liability Charges | 861,000 | 823,000 | 1,160,000 |
| Minority Interest | - | - | - |
| Negative Goodwill | - | - | - |
| Total Liabilities | 26,478,000 | 27,305,000 | 27,175,000 |
| Stockholders' Equity | |||
| Misc. Stocks Options Warrants | - | - | - |
| Redeemable Preferred Stock | - | - | - |
| Preferred Stock | - | - | - |
| Common Stock | 46,000 | 50,000 | 53,000 |
| Retained Earnings | 5,884,000 | 8,188,000 | 9,644,000 |
| Treasury Stock | - | - | - |
| Capital Surplus | 5,661,000 | 5,348,000 | 4,899,000 |
| Other Stockholder Equity | -638,000 | -629,000 | -599,000 |
| Total Stockholder Equity | 10,953,000 | 12,957,000 | 13,997,000 |
| Net Tangible Assets | 10,953,000 | 12,957,000 | 13,997,000
|
Income Statement
All numbers in thousands
| Revenue | 1/28/2017 | 1/30/2016 | 1/31/2015 |
| Total Revenue | 69,495,000 | 73,785,000 | 72,618,000 |
| Cost of Revenue | 48,872,000 | 51,997,000 | 51,278,000 |
| Gross Profit | 20,623,000 | 21,788,000 | 21,340,000 |
| Operating Expenses | |||
| Research Development | - | - | - |
| Selling General and Administrative | 13,356,000 | 14,665,000 | 14,676,000 |
| Non Recurring | - | - | - |
| Others | 2,298,000 | 2,213,000 | 2,129,000 |
| Total Operating Expenses | - | - | - |
| Operating Income or Loss | 4,969,000 | 4,910,000 | 4,535,000 |
| Income from Continuing Operations | |||
| Total Other Income/Expenses Net | - | 620,000 | 620,000 |
| Earnings Before Interest and Taxes | 4,969,000 | 5,530,000 | 4,535,000 |
| Interest Expense | 1,004,000 | 607,000 | 882,000 |
| Income Before Tax | 3,965,000 | 4,923,000 | 3,653,000 |
| Income Tax Expense | 1,296,000 | 1,602,000 | 1,204,000 |
| Minority Interest | - | - | - |
| Net Income From Continuing Ops | 2,669,000 | 3,321,000 | 2,449,000 |
| Non-recurring Events | |||
| Discontinued Operations | 68,000 | 42,000 | -4,085,000 |
| Extraordinary Items | - | - | - |
| Effect Of Accounting Changes | - | - | - |
| Other Items | - | - | - |
| Net Income | |||
| Net Income | 2,737,000 | 3,363,000 | -1,636,000 |
| Preferred Stock And Other Adjustments | - | - | - |
| Net Income Applicable To Common Shares | 2,737,000 | 3,363,000 | -1,636,000 |
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