Project in Finance and Accounting - Essay Example

Finance and accounting Requirements Primary products/services: What are primary products and/or services of your firm? List them in bullet points with brief descriptions. (Refer to 10-K, Item 1.) “everyday essentials”: Toiletries; Shampoo, toothpaste, bandages... Food; Frozen foods, vegetables, meat, dry food - In-Store Amenities: - Target Cafe - Target Clinic - Target Pharmacy - Target Photo - “ fashionable, differentiated merchandise at discounted prices” 2. Primary customers: What are primary customers, target markets, or distribution channels of your firm? List them in bullet points with short descriptions. (Refer to 10-K, Item 1.) Target is located in America and Canada, with a higher revenue reported in the United States. Their consumers or “guests” as referred to in the 10-k report are both in store and online. In store, there is a wide arrangement of food that can be bought, but this section online is smaller as perishables will not be sold online. The digital channel is only in the American Market and has not been introduced in Canada. 3. Past performance: Find the letter to shareholders from the CEO or Chairman in the Annual Report to Shareholders described in the Information Source 2. Summaries of how the CEO or Chairman evaluates the firm’s past performances. A top priority in the past year was our continued journey to becoming a truly omnichannel retailer. We intensified our focus on providing a guest experience that seamlessly integrates physical and digital shopping, while offering outstanding convenience and a compelling assortment of distinctive style and exceptional value. Enhancements to Target’s mobile app; the launch of Cartwheel, our social savings program; strategic acquisitions that expanded our online assortment; and the rollout of pick-up-instore capabilities ensure that our guests can shop whenever and however they want. And, the increased development of our technology and evolution within our supply chain further support our omnichannel transformation. In addition, 2013 marked the largest single year of store growth in Target’s history. On top of 19 new stores in the U.S., we opened 124 stores and three distribution centers in Canada. We are proud of our team’s incredible dedication and commitment to achieving this unprecedented international expansion, but we are disappointed in our financial performance during our first year in Canada, which resulted in much higher than expected earnings dilution. We believe the operational changes we have made will deliver stronger performance in 2014, and we remain confident that our Canadian segment will prove to be an excellent investment over time. Finally, last year we also sold our entire consumer credit card portfolio to TD Bank Group. We’re very pleased to have reached the right agreement with the right strategic partner in a transaction that removes these more volatile assets from our balance sheet and allows us to continue offering valuable debit and credit payment options and rewards to our guests. 4. Future strategy: Find the letter to shareholders from the CEO or Chairman in the Annual Report to Shareholders described in the Information Source 2. Copy and paste the paragraph(s) on the vision, future plans or goals. To our shareholders Amid massive transformation in the retail industry and challenges to our business, 2013 was a year that tested the strength of our brand and the resilience of our team. And, while we fell short of our performance expectations, we made meaningful investments and progress in key strategies that position Target to deliver sustained growth and shareholder return well into the future. A top priority in the past year was our continued journey to becoming a truly Omni-channel retailer. We intensified our focus on providing a guest experience that seamlessly integrates physical and digital shopping, while offering outstanding convenience and a compelling assortment of distinctive style and exceptional value. Enhancements to Target’s mobile app; the launch of Cartwheel, our social savings program; strategic acquisitions that expanded our online assortment; and the rollout of pick‐up‐in‐store capabilities ensure that our guests can shop whenever and however they want. And, the increased development of our technology and evolution within our supply chain further support our Omni-channel transformation. In addition, 2013 marked the largest single year of store growth in Target’s history. On top of 19 new stores in the U.S., we opened 124 stores and three distribution centers in Canada. We are proud of our team’s incredible dedication and commitment to achieving this unprecedented international expansion, but we are disappointed in our financial performance during our first year in Canada, which resulted in much higher than expected earnings dilution. We believe the operational changes we have made will deliver stronger performance in 2014, and we remain confident that our Canadian segment will prove to be an excellent investment over time. Finally, last year we also sold our entire consumer credit card portfolio to TD Bank Group. We’re very pleased to have reached the right agreement with the right strategic partner in a transaction that removes these more volatile assets from our balance sheet and allows us to continue offering valuable debit and credit payment options and rewards to our guests. While we achieved these and other important milestones. In the face of economic and competitive challenges throughout the year, we did not deliver our planned sales and earnings, and our shortfall was further exacerbated by the impact of the criminal attack on our systems just before the holiday season. We know our guests were deeply affected by this breach and we are sorry for The anguish and inconvenience it has caused. We are Committed to learning from this incident and dedicating time and resources to make Target, and our industry, more secure for consumers in the future. The events of 2013 have further sharpened our resolve to be an even stronger competitor in the marketplace to uphold our “Expect More. Pay Less.” brand promise by bringing inspiration, tremendous value and incomparable shopping ease to our guests. We believe this commitment, combined with our team’s passion, our strong capital position and our disciplined expense management will keep us on pace to achieve our long‐term financial goals and reward our shareholders for many years to come. Gregg Steinhafel Chairman, President and CEO Target 5. Forward looking: Does the management discussion and analysis (MD&A) in 10-K item 7 contain any ‘forward-looking’ statements? If it does, summarize them. If not, write ‘not available.’ Future Capital Investments: In the 10-k, it is stated that approximately 100 million USD will be invested into REDcards, and store card readers in stores across America. Forward Looking Statements: The talk about bettering Financial Performance but do not go into detail statements regarding the adequacy of and costs associated with our sources of liquidity, the fair value and amount of the beneficial interest asset Better valuation of Target’s worth and costs Repurchasing shares Briefly say they are looking at new taxes and how they will affect net income They also talk about how they are closing down their Canadian stores and how this will affect the company They talk about data breach, but fail to say what they are doing to help stop it from happening again, except for putting more money into anti-fraud programs previously in the 10-k 6. Search the management discussion and analysis (MD&A) in 10-K item 7 or the Notes to the Consolidated Financial Statements in 10-K item 8 for any discussion on the firm’s liquidity. If you find it, summarize it. If you don’t, write ‘not available.’ They are a dependent on a stable, liquid and well-functioning financial system to fund our operations and growth plans. In particular, we have historically relied on the public debt markets to raise capital for new store development and other capital expenditures, the commercial paper market and bank credit facilities to fund seasonal needs for working capital, and the asset-backed securities markets to partially fund our accounts receivable portfolio. Their continued access to these markets depends on multiple factors including the condition of debt capital markets, our operating performance and maintaining strong debt ratings. If the credit ratings were lowered, their ability to access the debt markets and our cost of funds for new debt issuances could be adversely impacted. Each of the credit rating agencies reviews its rating periodically, and there is no guarantee our current credit rating will remain the same. 7. Competition: Search the management discussion and analysis (MD&A) in 10-K item 7 or the Notes to the Consolidated Financial Statements in 10-K item 8 for any discussion on the firm’s competition or competitors. If you find it, summarize it. If you don’t write ‘not available’ Not Available 8. R&D: Search the management discussion and analysis (MD&A) in 10-K item 7 or the Notes to the Consolidated Financial Statements in 10-K item 8 for any discussion on the firm’s research and development activities. If you find it, summarize it. If you don’t write ‘not available’ Not Available 9. Risk factors: What are the risk factors identified by the firm? List them in bullet points with brief descriptions. (Refer to 10-K, Item 1A.) Strategic risk Operational risk Compliance risk Reputational risk financial risks risk 10. Legal issues: Does your firm have any legal proceedings? If it does, summarize them. (Refer to 10-K, Item 3.) They only talk about legal issues in Canada that have occurred due to liquidation of assets and closing of stores. “Filed for protection under the Companies’ Creditors Arrangement Act with the Ontario Superior Court of Justice in Toronto (the Court).” They has also been a monitor and financial advisors appointed to help make the liquidation process in Canada easier. 11. Dividends: Did your firm declare or pay dividends? Describe them. (Refer to 10-K, Item 5 or Item 8 Notes to the Consolidated Financial Statements.) It does not state anything about dividends paid or declared, but does state cumulative total shareholder return. 12. Treasury stock: Did your firm repurchase its own common stock (treasury stock)? If not, dose it plan to? Describe it. (Refer to 10-K, Item 5.) They say that they are going to buy 5 billion USD worth of Target common stock. They have currently bought 49.9 million stocks through a 3.1 billion USD investment. 13. Auditor report: Copy and paste the ‘report of independent registered public accounting firm.’ Underline the responsibilities of the company’s management and those of the auditor in the first paragraph of the report. (Refer to 10-K, Item 8 or Annual Report in Source 2.) Management is responsible for the consistency, integrity and presentation of the information in the Annual Report. The consolidated financial statements and other information presented in this Annual Report have been prepared in accordance with accounting principles generally accepted in the United States and include necessary judgments and estimates by management. To fulfill our responsibility, we maintain comprehensive systems of internal control designed to provide reasonable assurance that assets are safeguarded and transactions are executed in accordance with established procedures. The concept of reasonable assurance is based upon recognition that the cost of the controls should not exceed the benefit derived. We believe our systems of internal control provide this reasonable assurance. The Board of Directors exercised its oversight role with respect to the Corporations systems of internal control primarily through its Audit Committee, which is comprised of independent directors. The Committee oversees the Corporations systems of internal control, accounting practices, financial reporting and audits to assess whether their quality, integrity and objectivity are sufficient to protect shareholders investments. 14. Auditor: Who are the independent registered public accounting firm and the signing partner of the report of independent registered public accounting firm? What are their opinion on the financial statement and internal control of the firm in the last paragraph of their report? (Refer to the ‘report of independent registered public accounting firm.’) The responsibilities of auditors are to write an independent opinion as to whether or not the financial statements of the firm are prepared as per the accounting principles, state whether such statements have the material error and finally audit the book of accounts and state whether they portray a free and fare view of the firm’s affairs. More so, they prepare the financial statements that show the financial position of the respective firm as per the time of audit. 15. Income: What is the firm’s Income before Income Taxes and Net Income for this fiscal year and the prior fiscal year? (Refer to the Consolidated Income Statements in 10-K Item 8.) Fiscal Year 2014 2013 Income Before Income Taxes (dollars in millions) $3653M $4121M Net Income (dollars in millions) $(1636) $1971 16. Stock price: What are the stock prices of your firm as of the fiscal year end dates of this year and the prior year? (Refer to Google Finance.) Fiscal year ending date 01/31/2014 02/01/2013 Stock price ($) $75.33 $63.49 17. PE ratio: Calculate the price-to-earnings (PE) ratio at the fiscal year end dates of this year and the prior year, where PE ratio = Stock price ÷ Income. Fiscal Year End Date 2014/12/31 2013/12/31 PE ratio using Income Before Income Taxes = 0.0206 = 0.0154 PE ratio using Net Income =(0.0560) = 0.0383 18. B/S: How much are the total Assets and total Shareholders’ Equity as of this fiscal year end date and two prior fiscal year end dates? (Refer to the Consolidated Balance Sheets in 10-K Item 8.) Fiscal year end date 2015/01/31 201/02/1 Total Assets (dollars in millions) $41404 $44553 Total Equities (dollars in millions) $13997 $16231 19.ROA/ROE: Using Income before income taxes and Net income, calculate Return on Assets (ROA) and Return on Equity (ROE) where ROA= Income÷[(beginning balance of total assets + ending balance of total assets)÷2] and ROE= Income÷[(beginning balance of total equity + ending balance of total equity)÷2] for this fiscal year and the prior fiscal year. Fiscal Year 2015 2014 ROA using Income Before Income Taxes = 0.1095 = 0.1160 ROA using Net Income = (0.0325) = 0.040 ROE using Income Before Income Taxes = 0.3240 = 0.3185 ROE using Net Income = (0.0960) = 0.1020 20. EPS: What are the firm’s Basic Earnings Per Share and Diluted Earnings Per Share for this fiscal year and the prior fiscal year? (Refer to the Consolidated Income Statements in 10-K Item 8.) Fiscal Year 2014 2015 Basic EPS $(2.58) $3.10 Diluted EPS $(2.56) $3.07 21. Cash flows: How much are net cash flows from operating activities, investing activities, financing activities, and capital expenditures for this fiscal year and the prior fiscal year? Capital expenditures are expenditures on fixed assets. (Refer to the Consolidated Cash Flows Statements in 10-K Item 8.) Fiscal Year 2014 2013 net cash flows from operating activities (dollars in millions) $4439M $6520 net cash flows from investing activities (dollars in millions) $(1926) $(271) net cash flows from financing activities (dollars in millions) $(998) $(6364) Capital expenditures $1786 $1886 22. Segment: Summarize the firm’s business segment information. (Refer to Notes to Consolidated Financial Statements in 10-K item 8.) Management is responsible for the consistency, integrity and presentation of the information in the Annual Report. The consolidated financial statements and other information presented in this Annual Report have been prepared in accordance with accounting principles generally accepted in the United States and include necessary judgments and estimates by management. They also said that by fulfilling their responsibility they can maintain the systems under internal control also to provide reasonable assurance that safeguard transactions. The concept of the assurance is based upon recognition that the cost of the controls should not exceed the benefit derived. Also the committee oversees the Corporations systems of internal control, accounting practices, financial reporting and audits to assess whether their quality, integrity and objectivity are sufficient to protect shareholders investment. Target has sent their consolidated financial statements to be audited by Ernst & Young LLP. 23. Read through the Notes to Consolidated Financial Statements in 10-K item 8 and analyze in your words why the firm’s profitability and EPS changed or did not change over the two fiscal years – current and prior. The firm’s profitability declined in 2014 as compared to 2013 due to increase in selling and administrative expenses. Additionally, the major contributor of the decrease is the substantial increase in discounted operations net of tax. On the other hand, the earnings per share declined due to a fall in the profit generation of the company. 24. Current report: Find three recent current reports 8-K from the SEC filing and summarize the contents. SEC filing date Summary 04/28/15 Report of unscheduled material events or corporate event 03/23/15 submission of matters to vote of security holders 03/18/15 Results of Operations and Financial Condition. 25. Codes of Ethics: Copy and paste the information on ‘codes of ethics’ in the firm’s DEF 14A proxy statement. We are committed to conducting business lawfully and ethically. All of our directors and named executive officers, like all Target team members, are required to act at all times with honesty and integrity. Our Business Conduct Guide covers areas of professional conduct, including conflicts of interest, the protection of corporate opportunities and assets, employment policies, confidentiality, vendor standards and intellectual property, and requires strict adherence to all laws and regulations applicable to our business. Our Business Conduct Guide also describes the means by which any employee can provide an anonymous report of an actual or apparent violation of our Business Conduct Guide. We intend to disclose any future amendments to, or waivers from, any provision of our Business Conduct Guide involving our directors, our principal executive officer, principal financial officer, principal accounting officer, controller or other persons performing similar functions on our website within four business days following the date of any such amendment or waiver. No waivers were sought or granted in fiscal 2013. 26. Audit Committee: Copy and paste the responsibility of Audit Committee in the firm’s DEF 14A proxy statement. The role of the Audit Committee is to assist the Board of Directors in fulfilling its responsibility to oversee Target’s financial reporting process. Management has primary responsibility for our consolidated financial statements and reporting process, including our systems of internal controls. Target’s independent registered public accounting firm is responsible for expressing an opinion on the conformity of our consolidated financial statements with accounting principles generally accepted in the United States. In addition, the independent registered public accounting firm will express its opinion on the effectiveness of our internal control over financial reporting. 27. Compensation committee: Copy and paste the responsibility of Compensation Committee in the firm’s DEF 14A proxy statement. The Compensation Committee conducted a comprehensive review of all pay elements, including perquisites, as part of its outreach efforts following the 2013 Say on Pay vote. The Compensation Committee determined that the perquisites we provide are appropriate, while simultaneously undertaking considerable changes to other elements of program as described in our Compensation Discussion and Analysis 28. Executive compensation table: Go to the ‘Executive Compensation’ section of the firm’s DEF 14A proxy statement. Copy and paste Executive Compensation table the table should contain the dollar information on salary, bonus, and equity compensation for the five or six top paid executive officers of the firm.                                                 NAME AND PRINCIPAL POSITION   FISCAL YEAR   SALARY BONUS(1) STOCK AWARDS(2)(3)   OPTION AWARDS(2)   NON-EQUITY  INCENTIVE PLAN  COMPENSATION   CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS(4)   ALL OTHER COMPENSATION(5)   TOTAL     Gregg W. Steinhafel Former Chairman, President & Chief Executive Officer*   2013   $   1,500,000   $   0   $   10,224,120     $   0     $   0     $   720,219     $   508,875     $   12,953,214         2012   $   1,500,000   $   0   $   5,285,245     $   5,248,573     $   2,880,000     $   665,528     $   5,068,118     $   20,647,464         2011   $   1,500,000   $   1,250,000   $   4,857,502     $   3,696,982     $   2,205,000     $   673,635     $   5,523,988     $   19,707,107       John J. Mulligan Interim President &  Chief Executive  Officer, Chief  Financial Officer*   2013   $   700,000   $   150,000   $   3,505,105     $   0     $   0     $   5,465     $   273,286     $   4,633,856         2012   $   602,404   $   371,917   $   1,395,687     $   1,340,064     $   415,250     $   35,381     $   313,505     $   4,474,207                                                                           Kathryn A. Tesija Executive Vice President, Merchandising & Supply Chain   2013   $   950,000   $   0   $   5,841,653     $   0     $   0     $   8,080     $   398,268     $   7,198,001         2012   $   900,000   $   371,700   $   2,306,493     $   2,233,443     $   648,000     $   54,159     $   653,424     $   7,167,219         2011   $   850,000   $   351,050   $   2,068,055     $   1,663,643     $   442,000     $   81,178     $   578,492     $   6,034,418       Tina M. Schiel Executive Vice President, Stores   2013   $   725,000   $   0   $   3,797,152     $   0     $   0     $   7,595     $   149,975     $   4,679,722         2012   $   700,000   $   270,900   $   1,516,896     $   1,451,738     $   504,000     $   30,031     $   166,606     $   4,640,170                                                                           Jeffrey J. Jones II Executive Vice President & Chief Marketing Officer   2013   $   700,000   $   0   $   3,505,105     $   0     $   0     $   0     $   87,169     $   4,292,275         2012   $   537,500   $   202,042   $   3,000,088     $   2,072,624     $   390,000     $   0     $   597,017     $   6,799,271                                                                                                                                               29. Compensation plans: Go to the ‘Executive Compensation’ section of the firm’s DEF 14A proxy statement. Firms usually have annual (cash incentive, i.e. bonus) compensation plans and equity compensation plans. Summarize them. Clearly list which performance measures are used in the compensation plans – financial versus nonfinancial (See the balanced score card in your textbook as a reference.). Annual incentive plans For the incentives to be given to shareholders at the year end, the performance is measured based on profitability of the firm, the service delivered to the market and capitalization. Equity compensation plans The performance is measured by the debt to equity ratio, the return on equity and cash flows performance. 30. Conclusion: Perform a SWOT analysis on your firm based on the information you gathered so far. Strengths Customer loyalty, quality brands, favorable real estate location, size and cost advantages, In store business card for target customers, more fashionable than Wal-Mart Weaknesses High debt burden, Online presence Lacks, Not situated globally, High Staff turnover, Domestic Market Potential Opportunities International Expansion, Private labels, Drop in fuel costs, New Markets exist outside Targets core Threats Cleaner floors, Intense competition, Volatile Commodity lost Conclusion Target Corporation specializes in the operation of general merchandise and food discount stores in the United States and offer an assortment of general merchandise, including consumables and commodities; electronics, entertainment, sporting goods, and toys; apparel and accessories; and home furnishings and decor; as well as a line of food items. Works Cited CIRCLE, MONUMENT. "UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K and FORM 10-K/A (Conformed) (Mark One) ( X ) Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 for the Fiscal Year Ended." 1 (2015): 72. Print. Available at: http://www.sec.gov/Archives/edgar/data/27419/000002741915000012/tgt-20150131x10k.htm#s20BAF4045A65EEA726BBA5EBB16171EE Read More