Resources Needed to Complete Analysis
❖ Use the Target Corporation’s Form 10-K to complete the case. You will be working with Target’s two most recent fiscal year Annual Reports. You can pull the two most recent Annual Reports from this link: https://investors.target.com/annual-reports❖ Target’s Form 10-K is available on the company’s website or through the SEC’s EDGAR database here: https://www.sec.gov/edgar/searchedgar/companysearch.html❖ How to use EDGAR: https://www.sec.gov/oiea/Article/edgarguide.html❖ Access Project Excel template from Canvas ❖ Access Project Written Analysis template from Canvas❖ Access latest industry information from the IBISWorld Industry Market Research Database within the college library.
o Visit my.baker.edu o Select “Department Resources”o Select Academic Resource Centero Click on the “Library” icono Click on the “Articles & Databases” icono Scroll down to the business databases and select IBISWorld Industry Market Research o Enter Library number (if asked)o In the search box type Target’s NAICS Code: 45211o Select “45211 – Department Stores in the US Industry Report”o Scroll down and select under “Major Players” Target Corporation o Use the information here for industry performance for competitors of Target for analysis
Part I. Financial Analysis in Excel (90 points)
Section 1. Financial Statement Analysis (35 points)
Please be sure to show all support for your work. You will be using the following sections of the annual report: MD&A, consolidated financial statements and notes to the financial statements.
Complete the following tabs in the Excel template:
A. Vertical Analysis – Income StatementsB. Vertical Analysis – Balance Sheets C. Horizontal Analysis – Income StatementsD. Horizontal Analysis – Balance Sheets
Section 2. Ratio Analysis (35 points)
Identify the appropriate formula and calculate the following ratios for the most recent two fiscal years (Market performance ratios (earnings per share, book value per share, price-earnings ratio, and dividend yield are already computed and included in the template.)
NOTE: You will need to use the previous year’s reports in order to calculate averages where applicable.
Complete the following ratios in the Excel template:
• Measures of liquidityo Working capitalo Current ratioo Quick ratioo Inventory turnovero Average days to sell inventory• Measures of solvencyo Debt to assetso Debt to equityo Number of times interest earnedo Plant assets to long-term liabilities• Measures of profitabilityo Net margin (return on sales)o Asset turnovero Return on investmento Return on equity
Section 3. Budgeting (20 points)
In this section visit https://investors.target.com/annual-reports to access the previous three years annual reports NOT including the two fiscal years you have analyzed to calculate the following in the template.
1. Calculate the percentage change for each of the following categories of revenues and expenses the recent two fiscal years.2. Calculate the average percentage change3. Use the most recent two years data and the average percentage change calculated in Section 1 to prepare a budget for last year.
Part II. Written Analysis (90 Points)
Complete the following components in your written analysis template
➢ Cover Page
➢ Section 1. Accounting Treatment (18 points)
For this section, analyze and explain in detail the accounting treatment of the following areas for Target using the most recent annual report and disclosures.
• Fixed Assets • Intangible Assets • Liabilities (long term and short)
➢ Section 2. Trend Analysis (18 points)• Using the vertical analysis of the income statements, identify the significant trends • Using the vertical analysis of the balance sheets, identify the significant trends • Using the horizontal analysis of the income statements, identify the significant trends• Using the horizontal analysis of the balance sheets, identify the significant trends
➢ Section 3. Ratio Trend Analysis (18 points)• Using the ratio analysis, identify the trends in ratios between the last two years as well as compare to the industry information accessed from the IBIS database.• Also analyze ratios and figures based on the disclosures in the annual report as evidence to the noticeable trends
➢ Section 4. Budgeting Analysis (18 points)• Compare actual amounts from last year to the budget you have created for sales. Give an analysis on if Target exceeded budgeted sales. If so, explain the contributing factors for this. If sales did not exceed what was budgeted, explain the contributing factors. • Compare actual amounts from last year to the budget you have created for expenses. Give an analysis on if Target exceeded budgeted expenses. If so, explain the contributing factors for this. If expenses did not exceed what was budgeted, explain the contributing factors.
➢ Reference List