TARGET CORPORATION FINANCIAL ANALYSIS AND INTERPRETATION - Essay Example

d] TARGET CORPORATION FINANCIAL ANALYSIS AND INTERPRETATION Target Corporation Target Corporation Perform their business as Target, is an American department store. It is the second-largest wholesale vendor in the United States; it is situated in behind the Wal-Mart. The company was founded in 1902 by the name of Dayton Dry Goods Company in 1902 (Firestone 16-17). First Target store was opened nearby Roseville, Minnesota in 1962.As of January 2010, Target Corporation operated 37 division centers United States.

Target Corporation competes in a straight line against other discount retailers, mainly like Wal-mart and K-mart. Target Corporation’s Financial Analysis:In order to define whether an organization is doing sound we must go through a few things. One of major thing is its liquidity. This is the capacity of dealing to meet up its short term cash necessities. Another aspect is its efficiency. This refers to how fruitful a company is in using assets. Liquidity and efficiency are significant and complement each other.

To calculate a company’s short term liquidity (requirement) we need to figure out the current ratio and working capital. Working capital is the current assets less the current liabilities. To calculate the current ratio we divide the current assets by current liabilities.In looking at the objective organization’s financials for years 2004, 2005 and 2006 we can see how sound they performed over the years. 4,638 was its working capital in 2004. We got this by subtraction of current liabilities of 8,134 from current assets of 12,952.

5702 and 4817 was the working capital in 2005 and 2006 respectively.Now we have to look for the current ratio for these same periods. In 2004 current ratio for Target Company is 1.56. We got this number by dividing 12,952, which are current assets, by its current liabilities, 8,314. In 2005 and 2006 the current ratio is 1.69 and 1.50 respectively.Looking at these statistics we can see that Target’s current ratio decreased from 2004 to 2006. It shows that the ability for paying its current liabilities had decreased over 2 years (2005-2005).

Company’s asset turnover: It reflects the company’s ability how use assets to create sales. It is an important aspect in a company’s working efficiency. To calculate this we divide net sales by average total assets. Target Company the asset turnover for 2004 is 0.20. It can be determined by its net sales of 3,198 and divided by average of total assets of 15,708. The asset turnover rate was 0.15 for 2005. In years 2004, 2005 and 2006 we can see that from 2004 and 2005 there was an increase in liquidity and efficiency but in 2006 there was a fall.

Although there was a fall, Targets results are not that unusual from other companies, in fact some had even bigger decreases and struggled more within the same time period. I would like to invest in the Target Corporation; with the drop from 2005 to 2006 at the overall picture the drop is not that significant.Consolidated Statement Of Financial PositionAmount in Millions200620052004AssetCash & Cash Equivalents$1,648 $2,245 $708 Account receivable 5,666 5,069 4,621 Inventory5,838 5,384 4,531 Other current assets1,253 1,224 1,000 current asset discontinuous operations -2,092 Total Current Assets14,405 13,922 12,952 Property & EquipmentsLand4,449 3,904 3,312 building and improvement14,174 12,518 11,022 Fixture & Equipments5,433 4,988 4,577 construction in progress1,168 982 969 Accumulated Depreciation(6,176)(5,412)(4,727)Property & equipments-Net19,038 16,860 15,153 other Non Current Assets1,552 1,511 1,377 Non Current Assets discontinued operation0 -1,934 Total Assets$34,995$32,293$31,416Liabilities & Share Holders InvestmentAccounts Payable$6,268 $5,779 $4,956 Accrued Liabilities2,193 1,633 1,288 Taxes Payable374 304 382 Notes Payable753 504 863 Current Portion of Long Term notes Payable0 825 9,588 8,220 8,314 Long Term Debt9,119 9,034 10,155 Deferred Income 851 973 632 Other Non Current Liabilities1,232 1,037 917 Non Current liabilities of discontinued operations-266 Shareholders InvestmentCommon Stock73 74 76 Additional Paid in Capital2,121 1,810 1,530 Retained Earning12,013 11,148 9,523 accumulated other income(2)(3)3 Total14,205 13,029 11,132 Total Liabilities & Shareholder’s Investment$34,995$32,293$19,446Works CitedFirestone, Mary.

Daytons Department Store. Charleston, SC: Arcadia Pub, 2007. Print.