Question

TARGET CORPORATION

You should acquire the company's 10-K at the EDGAR link at the SEC website. You should write a short report answering the following questions about the assigned company. For this project, refer to your book especially Chapters 5 and 13.
IF YOU MUST REPORT A RATIO, A PERCENTAGE, OR ANSWER IF THERE HAS BEEN A CHANGE, YOU MUST SHOW CALCULATIONS

1) General information:
a) Where is the corporate headquarters, what city and state? Where did you find this information?
b) On what day of the year does its fiscal year end? Where did you find this information?
c) What types of products or services does it sell/serve? Where did you find this information?
d) When and where is the next annual stockholders’ meeting? Where did you get this information?

2) Report of Independent External Auditor
a) Who is the corporation’s independent auditor and in what city are they located?
b) Does the auditor believe the financial statements were presented fairly? What statements in the auditor’s opinion support your conclusion?
c) What company conducted the Sarbanes/Oxley internal controls review? What were the results of the review?

3) For how many years does it present complete balance sheets? Income statements? Cash flow statements?

4) Income Statement
a) Did its revenue (or sales) increase or decrease over the last year? What was the percentage change?
((this year-last year)/last year)
b) Describe the company's revenue recognition policy. Where did you find this? What are some factors that the company used in determining its revenue recognition policy?
c) Did its cost of goods sold increase or decrease over the last quarter? What was the percentage change? What are some ways to decrease cost of goods sold and what effect would this have on gross profit?
d) Compare the percentage change in revenue to the change in cost of goods sold. Are they similar? If they are not, does Management say anything about revenues and costs that might explain a difference? If they do, what reasons did management give for the change? (Look in Management Discussion & Analysis—MD&A)
e) Did its net income increase or decrease over the last year? What was the percentage change?
f) What method of depreciation does the company use? Where did you find this? What are some reasons that a Company would use one method of depreciation over another?
g) What amount is reported as depreciation expense for the current quarter? Where did you find this? How much cash was used to pay for this expense?

5) Balance Sheet
a) Did its total assets increase or decrease over the last quarter? What was the percentage change? What was the largest asset?
b) Identify the balance sheet accounts that were most significant in explaining the changes in total assets for the corporation? What events might explain the reasons for the changes in these accounts? Where did you get this information?

6) Cash Flow Statement
a) Did the company have a cash inflow or outflow from operating activities? Which statement did you use to find this? What item(s) caused it to be an inflow or outflow?
b) Did the company have a cash inflow or outflow from investing activities? What was the largest item in investing activities (either a use of cash or source of cash—report the largest)?
c) Did the company have a cash inflow or outflow from financing activities? What was the largest item in financing activities (either a use of cash or source of cash—report the largest)?

7) Profitability ratios
a) Compute the asset turnover ratio and explain its meaning. Is this strength or a weakness?
b) Compute the net profit margin ratio for the latest three years and explain its meaning. Do you see any trend? Is this strength or a weakness?
c) Compute the company's gross profit percentage for the latest three years; is there a trend over the three quarters? Is this strength or a weakness?
d) Compute the return on equity (ROE) for the last three years. Explain its meaning. Is there a trend indicated? Is this strength or a weakness?
e) In comparison to the previous year, has the corporation improved its ability to generate a profit? Justify your answer with the ratios you calculated in b, c and d. Does management offer an explanation for any changes or stability in the profitability of the corporation?
f) What is the basic earnings per share for continuing operations as it appears in the income statement for the past two years? Was the change in EPS a result of changes in the numerator or denominator?

8) Liquidity
a) Compute the company's current ratio for the last two quarters and explain its meaning. Is the current ratio adequate?
b) Compute the company’s receivable turnover for the last two years and explain its meaning. Is this strength or a weakness?
c) What amount of inventory does the company have at the end of the year? Did it increase or decrease over the last year? Where did you find this?
d) Compute the inventory turnover ratio. How is a low or high turnover ratio significant? Is this strength or a weakness?
e) What inventory costing method does the company use? Where did you find this?

9) Solvency ratios
a) Compute the debt-to-asset ratio for the last two years and explain its meaning. How did the debt position change over the last year? What were the sources of these changes?Would potential lenders prefer the debt to total assets ratio to be larger or smaller? Why?
b) Compute the times interest earned for the past two years and explain its meaning.

10) Would you invest in this company? Why or why not? Cite specific reasons why you would invest or not invest in this company.

11) Would you lend this company money? Why or why not? Cite specific reasons why you would or would not want to lend this company money.

12) What new accounting changes as issued by FASB has this company elected to follow? What changes to their financial reporting have occurred as a result of these changes?

13) Has this company filed XBRL exhibits with the SEC? If so, what reporting periods do the exhibits cover?

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a) Where is the corporate headquarters, what city and state? Where did you find this information?
The company owns corporate headquarters buildings located in and around Minneapolis, Minnesota and this information can be found in the Properties Section of Part 1 of Form 10-K.
b) On what day of the year does its fiscal year end? Where did you find this information?   
Target Corporation’s fiscal year ends on the Saturday nearest January 31. This information can be found in the Summary of Accounting Policies Section of Notes to Financial Statements....

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