ACC 610 9-1

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Jan 9, 2024

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1 ACC 610- Final Project Target Corporation Oaikhena Callistus Southern New Hampshire University ACC-610-Q1008 Financial Reporting . Instructor Charles Cullinan November 19 th , 2023

2 Conceptual Framework A. Explain how the conceptual framework and accounting standards apply to your company. This framework of financial reports gives details or information about the concepts, objectivity, defining, and financial reporting principles. The authentication of financial information and reporting is strengthened if objectivity and concepts provide direction and structure to financial accounting and reporting (Pro, 2017). Furthermore, the framework also aids the internally consistent standards development within and assists both the easy preparation and understatedly by end users of the financial statements, which makes every information in the statements beneficial and its utmost peak due to the compliance of the accounting body requirements again, Target Corporation with its reasoning in considering the merits applying alternative solutions to financial accounting complexity and also the reporting problems. B. Analyze the information within the disclosure statements for information that would interest your company's creditors. Creditors of any company benefit from the organization's financial information, including debt- equity ratio, sales turnover ratio, cashflow statement, net profit ratio, and more, which is disclosed in the information statement disclosure. Assets quality, sales ratio, and turnover ratio determine the time limit of the inventory sales by the company, bad debts provision on receivable accounts, and debt-equity ratio explains the amount of debt on equity. This means that when a company has a low debt-equity ratio, the opportunity for loan application is high and can put the business at risk if the company proceeds to take more loans. The interest ratio enveloped profits before interest and tax, the Profitability ratio is similar to the gross profit ratio, and the net profit

3 ratio respectfully declares the company's profit capability in loan repayment. With all this critical information, the creditors can reliably decide to give or decline the loan offer to the company. Why would this information be important to them? It clarifies to creditors by telling them the company's assets and liabilities. It also gives banks awareness of the business qualification and the amount of credit requirement. This information is essential to the creditors since it provides adequate information, allowing them to utilize the proper standard of accounting method. It also benefits the creditors because the information is traceable and understandable. Analyze the information within the disclosure statements for information that would interest your company's investors . Information concerning the company's profits, sales, dividend payout, inventory turnover, and debt-equity ratios are critical to the company's investors. Hence, the profits ratio explains the organizational growth, while the sales ratio explains the liquidity of the company to give practical knowledge of its growth and patronage, which shows what captures investors' interest in the company; the debt-equity ratio states the amount of debt over its equity, which means how much does the company own and understanding the payment history, which can aid the investors to determine how the company's financial position is. Why would this information be important to them? Every piece of information derived by the investors gives awareness about the Company's current liabilities status, including the Company's marketing rate and challenges. Analysis of Financial Statements

4 Based on the information you have gathered, explain the financial changes. Ratios. Has anything changed in the few years of financial statements that you have obtained? Ratio 2021 2022 Change Gross profit margin 28.2% 27.9% -0.3% Operating profit margin 8.5% 8.1% -0.4% Net profit margin 2.5% 3.2% +0.7% Return on assets (ROA) 7.1% 9.4% +2.3% Return on equity (ROE) 17.9% 23.3% +5.4% In this, it is understandably clear that the gross margin dropped by 0.3% in the year 2022 from 28.2% to 27.9%, and the Operating profit margin also slightly dropped by 0.4% from the year 2021 to 2022; however, there is an incline in the net profit margin which outstandingly increased by.7%, and this also includes Return on assets (ROA) increment by 2.3% and Return on equity (ROE) increment by 5.4 % What are the reasons for these changes?  The sales growth is strong.  The cost management is improved, and the affordability rate is encouraging.  The tax environment is favorable to the organization. Based on the information you have gathered, analyze the changes in the financial reports regarding cash. Be sure to examine the statement of cash flows.

5 The table below shows the changes in the cash flow of Target Corporation from the year 2021 to 2022. Item 2021 2022 Change Net cash flow from operating activities $5.1 billion $6.5 billion +$1.4 billion Net cash flow from investing activities -$1.3 billion -$1.0 billion +$0.3 billion Net cash flow from financing activities $0.2 billion $0.4 billion +$0.2 billion Net increase in cash $4.0 billion $5.9 billion +$1.9 billion The net cash flow derived from the operating activities 2022 increased by $1.4 billion, from $5.1 billion in 2021 to $6.5 billion in 2022. also, the Net cash from investing activities dropped, which is a plus for the organization it reduced from $1.3 billion in 2021 to $1.0 billion in 2022, which is an increment of $.3billion in profit, the Net cash flow from financing activities in 2021 was $ 0.2 and increased to $ 0.4billion which is $ 0.2 billion increment, and the huge one is the Net increase in cash of about $ 1.9 billion increment from 2021 which was $ 4.0 billion to 2022 $ 5.9 billion It is categorically stated that Target Corporation's cash flow has climbed higher from the past year; this means the company can self-sustain by generating enough cash to invest in its growth. What are the reasons for these changes?  Financial Ratio improvement

6  Strong sales growth and improving cost management. Based on the information you have gathered, analyze the changes in the financial reports regarding the accounts receivable account balance. The table below shows some essential account balances of the Target Corporation from 2021 to 2022. Account balance 2021 2022 Change Cash and cash equivalents $10.4 billion $16.3 billion +$5.9 billion Accounts receivable $11.2 billion $13.1 billion +$1.9 billion Inventory $16.5 billion $18.9 billion +$2.4 billion Property, plant, and equipment $25.6 billion $27.7 billion +$2.1 billion Long-term debt $10.3 billion $11.1 billion +$0.8 billion The Cash and cash equivalents of Targets is an increase of $ 5.9 billion, which means that $ 10.4 billion in 2021 was increased by $ 16.3 billion in 2022 and the Accounts Receivable was $11.2 billion in 2021 and $ 13.1 billion in 2022 that is, $ 1.9 billion increment The Inventory also increased by $2.4 billion in 2020 ($18.9 billion which was previously $ 16.5 billion in 2021, The property, plant, and equipment appreciated from $ 25.6 billion in 2021 to $ 27.7 billion in 2022 ($ 2.1billion increase) Long term debt was $ 10.3 billion in 2021 and increased to $11.1 billion in 2022 and increment of $ 0.8 billion

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