In addition to reading the financial statements to see the company's net income and financial position,...

Transcribed Image Text:

In addition to reading the financial statements to see the company's net income and financial position, additional analysis can be done with the calculation of ratios. You will be calculating ratios for 2 competitor companies, Walmart and Target, to learn more about each company's ability to pay current liabilities and long-term debt. You will also learn more about each company's profitability and market expectations. For this assignment, you will use the 2020 balance sheet and income statement for each company. Target's fiscal year ends on January 30, 2021 and Walmart's fiscal year ends on January 31, 2021. You will see Walmart has labeled the amounts for the 2020 fiscal year on the financial statements: 'For the fiscal year January 31, 2021' or 'As of January 31 2021. Target has labeled the amounts on the financial statements for the 2020 fiscal year as '2020' and January 30, 2021. Walmart Walmart 2020 Form 10k.pdf Target: Target 2020 Form 10k.pdf Scroll down to the table of contents, Under Part II, click on Financial Statements and Supplementary Data, Take note of the Report of Independent Registered Public Accounting Firm. You can see that Ernst & Young is the auditor for both companies. We will learn more about this is Chapter 7. You will see that the income statement is called the Statement of Income and the Statement of Operations. Requirements: PART 1 For each competitor company compute the following 9 ratios for the most recent year (2020) for each company. The balance sheet from the prior year will be needed to computé average total assets and average stockholders' equity Round your answers to 2 decimal places. For percentages, show the percentage carried to 2 decimal places. Ex: 1286 = 12.86% Use this Excel template file provided to complete the ratio calculations: Financial analysis assignment template SU21.xlsx Please let me know if you need this template in Google sheets Evaluating the ability to pay current liabilities 1. Working capital 2. Current ratio 3. Quick ratio (Acid-test ratio) 1. Working capital 2. Current ratio 3. Quick ratio (Acid-test ratio) Note: Neither company has short term investments. For Target, you will need to go to Note 10 to see the detail of Other Current Assets to get the amount of Receivables. Evaluating the ability to pay long term debt 4. Debt ratio 5. Number of times interest charges earned Note: use Interest, net for both companies as Interest Expense. Evaluating profitability (Show results as a percentage) 6. Profit margin percentage Note: Net income is called Net earnings by Target. Use Consolidated net income attributable to Walmart as Walmart's net income. 7. Return on assets 8. Return on equity company has preferred stock, so preferred dividends are zero.) Evaluating stock as an investment 9. Price-Earnings (P/E) ratio Note: Neither Note: Use Basic Earnings per share as the Earnings per share. To get the market price per share, you will need to look up the stock price as of the close of trading on the last day of the fiscal year. To get the market price of stock go to https://finance yahoo.com/. In the Search box, enter Walmart's stock symbol (WMT) and Delta's stock symbol (TGT). On the next screen, click on Historical Data You will see the recent stock prices. Because January 30 and 31 fell over the weekend in 2021, you need (millions, except footnotes) Assets Cash and cash equivalents Inventory Other current assets Total current assets Property and equipment Land Buildings and improvements Fixtures and equipment Computer hardware and software Construction-in-progress Accumulated depreciation Property and equipment, net Operating lease assets Other noncurrent assets Total assets Liabilities and shareholders' investment Accounts payable Accrued and other current liabilities Current portion of long-term debt and other borrowings Total current liabilities Long-term debt and other borrowings Noncurrent operating lease labilities Deferred income taxes Other noncurrent liabilities Total noncurrent liabilities Shareholders investment Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total shareholders investment Total liabilities and shareholders investment Common Stark Senangshan 022 A0277120 January 30, 2021 February 1, 2020 8,511 S 10,653 1,592 20,756 6,141 31,557 5,914 2,765 700 (20,278) 26,879 2,227 1,386 51,248 S 12,859 $ 6,122 1,144 20,125 11,536 2,218 990 1.939 16,683 42 6,329 8.825 (756) 14,440 51.248 $ 12,902 6,036 30,603 6,083 2,692 533 2,577 8,992 1,333 (19.664) 26,283 2,236 1,358 42,779 9,920 4,406 161 14,487 11.338 2.275 1,122 1,724 16,459 42 6.226 6,433 (968) 11.833 (Amounts in millions, except per share data) Revenues: Net sales Membership and other income Total revenues Costs and expenses: Cost of sales Operating, selling, general and administrative expenses Operating income Interest: Debe Finance, capital lease and financing obligations Interest income Interest, net Other (gains) and losses Income before income taxes Provision for income taxes Consolidated net income Consolidated net income attributable to noncontrolling interest Consolidated net income attributable to Walmart Net income per common share: Basic net income per common share attributable to Walmart Dilined net income per common share attributable to Walmart Weighted average common shares outstanding Dilated Disidends declared per rummon share Walmart Inc. Consolidated Statements of Income 2021 555,233 $ 3,918 559,151 420,315 116,288 22,548 1,976 339 (121) 2,194 (210) 20,564 6,858 Fiscal Years Ended Januar 2020 13,706 (196) 13.510 4.77 4.75 2.831 2847 716 S 519,926 4,038 523,964 394,605 108,791 20,568 337 (189) 2,410 (1,958) 20,116 4,915 15,201 (320) 14881 5.22 5.19 30 2,868 317 In addition to reading the financial statements to see the company's net income and financial position, additional analysis can be done with the calculation of ratios. You will be calculating ratios for 2 competitor companies, Walmart and Target, to learn more about each company's ability to pay current liabilities and long-term debt. You will also learn more about each company's profitability and market expectations. For this assignment, you will use the 2020 balance sheet and income statement for each company. Target's fiscal year ends on January 30, 2021 and Walmart's fiscal year ends on January 31, 2021. You will see Walmart has labeled the amounts for the 2020 fiscal year on the financial statements: 'For the fiscal year January 31, 2021' or 'As of January 31 2021. Target has labeled the amounts on the financial statements for the 2020 fiscal year as '2020' and January 30, 2021. Walmart Walmart 2020 Form 10k.pdf Target: Target 2020 Form 10k.pdf Scroll down to the table of contents, Under Part II, click on Financial Statements and Supplementary Data, Take note of the Report of Independent Registered Public Accounting Firm. You can see that Ernst & Young is the auditor for both companies. We will learn more about this is Chapter 7. You will see that the income statement is called the Statement of Income and the Statement of Operations. Requirements: PART 1 For each competitor company compute the following 9 ratios for the most recent year (2020) for each company. The balance sheet from the prior year will be needed to computé average total assets and average stockholders' equity Round your answers to 2 decimal places. For percentages, show the percentage carried to 2 decimal places. Ex: 1286 = 12.86% Use this Excel template file provided to complete the ratio calculations: Financial analysis assignment template SU21.xlsx Please let me know if you need this template in Google sheets Evaluating the ability to pay current liabilities 1. Working capital 2. Current ratio 3. Quick ratio (Acid-test ratio) 1. Working capital 2. Current ratio 3. Quick ratio (Acid-test ratio) Note: Neither company has short term investments. For Target, you will need to go to Note 10 to see the detail of Other Current Assets to get the amount of Receivables. Evaluating the ability to pay long term debt 4. Debt ratio 5. Number of times interest charges earned Note: use Interest, net for both companies as Interest Expense. Evaluating profitability (Show results as a percentage) 6. Profit margin percentage Note: Net income is called Net earnings by Target. Use Consolidated net income attributable to Walmart as Walmart's net income. 7. Return on assets 8. Return on equity company has preferred stock, so preferred dividends are zero.) Evaluating stock as an investment 9. Price-Earnings (P/E) ratio Note: Neither Note: Use Basic Earnings per share as the Earnings per share. To get the market price per share, you will need to look up the stock price as of the close of trading on the last day of the fiscal year. To get the market price of stock go to https://finance yahoo.com/. In the Search box, enter Walmart's stock symbol (WMT) and Delta's stock symbol (TGT). On the next screen, click on Historical Data You will see the recent stock prices. Because January 30 and 31 fell over the weekend in 2021, you need (millions, except footnotes) Assets Cash and cash equivalents Inventory Other current assets Total current assets Property and equipment Land Buildings and improvements Fixtures and equipment Computer hardware and software Construction-in-progress Accumulated depreciation Property and equipment, net Operating lease assets Other noncurrent assets Total assets Liabilities and shareholders' investment Accounts payable Accrued and other current liabilities Current portion of long-term debt and other borrowings Total current liabilities Long-term debt and other borrowings Noncurrent operating lease labilities Deferred income taxes Other noncurrent liabilities Total noncurrent liabilities Shareholders investment Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total shareholders investment Total liabilities and shareholders investment Common Stark Senangshan 022 A0277120 January 30, 2021 February 1, 2020 8,511 S 10,653 1,592 20,756 6,141 31,557 5,914 2,765 700 (20,278) 26,879 2,227 1,386 51,248 S 12,859 $ 6,122 1,144 20,125 11,536 2,218 990 1.939 16,683 42 6,329 8.825 (756) 14,440 51.248 $ 12,902 6,036 30,603 6,083 2,692 533 2,577 8,992 1,333 (19.664) 26,283 2,236 1,358 42,779 9,920 4,406 161 14,487 11.338 2.275 1,122 1,724 16,459 42 6.226 6,433 (968) 11.833 (Amounts in millions, except per share data) Revenues: Net sales Membership and other income Total revenues Costs and expenses: Cost of sales Operating, selling, general and administrative expenses Operating income Interest: Debe Finance, capital lease and financing obligations Interest income Interest, net Other (gains) and losses Income before income taxes Provision for income taxes Consolidated net income Consolidated net income attributable to noncontrolling interest Consolidated net income attributable to Walmart Net income per common share: Basic net income per common share attributable to Walmart Dilined net income per common share attributable to Walmart Weighted average common shares outstanding Dilated Disidends declared per rummon share Walmart Inc. Consolidated Statements of Income 2021 555,233 $ 3,918 559,151 420,315 116,288 22,548 1,976 339 (121) 2,194 (210) 20,564 6,858 Fiscal Years Ended Januar 2020 13,706 (196) 13.510 4.77 4.75 2.831 2847 716 S 519,926 4,038 523,964 394,605 108,791 20,568 337 (189) 2,410 (1,958) 20,116 4,915 15,201 (320) 14881 5.22 5.19 30 2,868 317