Let’s look at Target again. Think about the business of Target.
Return to Target’s 201 0 annual report. For instructions on how to access the report online, see the Continuing Financial Statement Analysis Problem in Chapter 2. On page 33 of the annual report, you’ll find Target’s income statement for the year ending January 29, 2011 (called the Consolidated Statement of Operations). Now answer the following questions:
1. Look at Target’s income statement. What are Target’s sales for the last three years? Are sales increasing or decreasing compared to the previous year?
2. Look at Target’s income statement. Target had 1,750 stores in 2010 and 1,740 stores in 2009. What are Target’s sales per store in 2010 and 2009? (Divide total sales by the number of stores Target operated in each year.) Are sales per store increasing or decreasing?
3. Look at Target’s income statement. What is Target’s gross profit margin for the years ending January 29, 2011 and January 30, 2010? Is Target’s gross profit margin increasing or decreasing?
4. Look at footnotes 2 and 3 of the financial statements (pages 37 and 38 of the financial statements found in the 2010 annual report). How is Target accounting for sales (revenue) and costs?
5. What is Target’s net income percentage for the years ending January 29, 2011 and January 30, 2010? Is Target’s net income percentage increasing or decreasing?
6. Looking back over your answers to questions 1 through 5, how do you think Target is performing? What do you think is causing the changes in Target’s sales, costs, and margins?