Return to Target’s 2010 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). On page 34 you’ll find Target’s balance sheet as of January 29, 2011 (called the Consolidated Statement of Financial Position). On page 35 you’ll find Target’s Consolidated Statement of Cash Flows. Now answer the following questions:
1. Look at Target’s balance sheet, income statement, and statement of cash flows. Find net income on the income statement and statement of cash flows for the year ending January 29, 2011. Find the ending balance of cash and cash equivalents on the balance sheet as of January 29, 2011 and January 30, 2010. How does the statement of cash flows for the year ending January 29, 2011 tie these amounts together? Show how Target’s statement of cash flows ties Target’s income statement and balance sheet together.
2. Look over Target’s statement of cash flows for the last two years. What are Target’s net cash flows from operating, investing, and financing activities? How have these cash flows changed over the last two years?
3. Look at Target’s balance sheet and income statement. What is Target’s cash conversion cycle for the year ending January 29, 2011? What does this cash conversion cycle tell you? Assume all sales are on account and ignore credit card revenue.