The Financial Statement Analysis Srikanth Gurram University Of Colorado Denver Abstract This report is to compare the financial statements of Target and Walmart for last three years and analyze its financial performance. The data has been downloaded from www.sec.gov for analysis. This report initially compares the financial healthiness of both firms based on the financial ratios and then discusses the factors that could have impacted these firms’ finances in last three years. This report also briefly discusses the differences in financial statements. Finally, this report concludes with a recommadenation to investor. Introduction: Walmart and Target both are very big retail marketers in United States of America. …show more content…
Below is a quick Current Ratio comparison chart between Walmart and Target for last three years. Walmart really has been operating with deficit working capital in last three consecutive years. Walmart says in their 2013 annual report that the reason for negative working capital because of their optimal utilization of cash, dividend payments and stock repurchases. Target does not usually operate with deficit working capital like Walmart but in 2014, it had lesser cash in their hand and also did not have any receivables specified in their financial statement. Thats why it went into deficit working capital for the year of 2014. Below is quick Working Capital comparison chart between Walmart and Target for last three years. Target did a great job of achieving more than 4% of margin by the year of 2014, but due the huge losses in 2014, it has decreased to less than 3% in 2014. When it comes to converting its revenue into actual profit, Target usually equally does a great job like Walmart. But, the popular credit card scam had hit the Target badly. Target had slightly increased sales but has a significant decrease in its net income. So, when you compare the financials just in last three years then the Net Profit Margin percentages in Walmart are consistent than in Target. For the year of 2014, there is a decrease in gross profit for Target, at the same
The retail industry is one of the largest industries in the world, by business numbers and employees. Plunkett Research Ltd. As of 2011 Wal-Mart was still the giant of the retail market. As Wal-Mart nearest competitor Target heats up the market, Target seems to be gaining in customer loyalty and has picked up on Wal-Marts grocery strategy. According to the Plunkett report, recession ravaged consumers not only want dry goods at a discount, but they also want groceries discounted (PlunkettResearch.Com, 2012). Target also has been gaining customers who want stylish well organized stores that appeal to their senses.
Target is one of the largest retailers in the United States. Target wants to be able to give guests better quality products for a cheaper price. They also want to be the one stop shop. Target relies on their team members to keep
Targets biggest competitor Wal-Mart is ranked 14th on the 2010 Forbes top 2000 companies. Wal-Mart posted financial numbers of 421.849 billion in sales, 16.993 billion in profit, and 180.663 in assets. However Wal-Mart's profit margin is 4.0%; 0.3% less than Target, and has a price to sale ratio of 0.43.
Target has been a successful retail company coming in 2nd place behind Wal-Mart. Although these success comes in many forms there are factors that deter Target from ever reaching first. Target Corporation has run into a few weaknesses in the recent years. These weaknesses that Target are facing can impact their future goals. These weaknesses include lawsuits that Target is facing with the recent events and not having an international presence.
Wal-Mart and Target are both discount BIG BOX retailers which have made the most of their strengths and have drawn upon the differences in their customer bases, product mix and business strategy. Even though both
Within every organization there are advantages and disadvantages as well as strengthens and weakness. One of the biggest weaknesses of the Target Corporation is that all of their operations are located in the US. The organization would benefit more if they engaged in business with multinational countries. Wal-Mart has more than 11,000 retail stores in 27 multinational countries. If Target is ever going to move out of their second place position behind Wal-Mart there are going to need to expand globally. The Target Corporation is still trying to recover from the embarrassing financial disaster they made when they tried expanding their brand in Canada. Target spent 1.8 billion for 222 locations in Canada. Unfortunately, this merger
Target Corporation is a retail chain specializing in household goods, clothing, food, and accessories at discounted prices. The retail chain’s history started back in 1902 as Goodfellows and in 1910 as The Dayton Company. Initially, the chain specialized in “furnishings, fabrics and decorations for business and other public institutions” (“Target Corporation,” 2016, p. 5). Eventually, Target went public in 1967 and on to acquire Mervyn’s in the 1970s where they became the seventh largest retailer in the United States. Target operates in the United States, where it is headquartered in Minneapolis, Minnesota and as of January 31, 2015 Target employs over 300,000 people. “The company recorded revenues of $72,618 million in the financial year ended January 2015, the operating profit of the company was $4,535 million, [and] the net profit was $2,449 million” (“Target
As we can see, the capital structure of Target and Best Buy is primarily comprised of long-term debts, borrowings, and common stock. Best Buy funds their business operations through a combination of available cash and cash equivalents, short-term investments and cash flows generated from operations. Best Buy also has a revolving credit facilities are available for additional working capital needs (Security and Exchanges
The one thing that Kmart did do was invest in redundancy. Unfortunately, their supply chain has always been behind the times, as its regular out-of-stock notices on hot items indicate, while causing an overflow of less popular products. The lack of real-time data access resulted in higher inventory carrying costs, poor buying decisions, and increased markdowns when products did not sell as anticipated. Financially, it has resulted in lower sales and lower profit margins per square foot. Kmart earns $245 whereas Target earns $275 and Wal-Mart $440. Kmart’s gross margins are 2.0 to 3.0 percent whereas Target’s are 5.5 to 7.0 percent and Wal-Mart’s are 5.5 to 6.5 percent (Atlas Partners & Watertown Capital, 2002).
If you glance at the financial ratios in the income statement you would see that Walmart is operating at a high capacity. The company’s profit margins although high are declining at time passes by. After looking at Walmart’s liquidity, the company is in a great position, it can pay off its debts without much trouble. Liquidity ratios include current ratio and quick ratio. If you look at the financial records you would see that current ratio has been on the rise since 2013. The liquidity position that Walmart is currently in indicates that company has not enough money to meet its current obligations. This means that Walmart is ideal with a company its size, if you look at the total debt ratio it shows that Walmart
The debt carries an obligation of payment to creditors while equity provides an opportunity for profits for shareholders. Therefore, all revenues from Target and Walmart operation must go to pay creditors first; shareholders retain whatever remains after accounting for all expenses, including the cost of operations, taxes, etc. Since shareholders face more risk than creditors, shareholders generally expect a return on their capital that is higher than the returns that creditors expect on their capital. However, Walmart and Target cost of capital is thus a mixture of returns to creditors and returns to equity provider (Trainer, 2017).
Wal-Mart and Target are both great retail stores to go and find a good bang for your buck shopping experience. After researching both companies, it appears they have the same ideas as a mission, saving the customer money. Wal-Mart Mission statement reads;
With the down turn in the economy, many consumers have turned to Dollar General and Dollar stores; this has caused a decrease in Target’s revenue. Another threat is Wal-Mart and their ability to offer lower prices on their products compared to Target which makes them the low cost leader. (ehow.com)
Target may have a bigger selection on some products, but their store is such a big hassle. To have a well managed store you need good customer service, a good atmosphere, and low prices. That’s something Target has none of and Wal-Mart has plenty of.
Kroger competes with Neighbor market and supercenters of Wal-Mart especially on the grocery product line. Target competes with Discount stores and supercenter shopping formats of Wal-Mart with Target commanding a small premium on prices as it follows fashion trend. Market segment of Target is the high-income customers leading to higher margin realization. ($ 50,000 of target vs. EDLP strategy of Wal-Mart by leveraging purchasing scale has pushed down prices compared to other retailers.