Resources Needed To Complete Analysis For The Target Company

Resources Needed To Completeanalysisuse The Target Corporations Form

Resources Needed to Complete Analysis – Use the Target Corporation’s Form 10-K to complete the case. You will be working with Target’s two most recent fiscal year Annual Reports. You can pull the two most recent Annual Reports from this link: Target’s Form 10-K is available on the company’s website or through the SEC’s EDGAR database here: How to use EDGAR: Access Project Excel template from Canvas Access Project Written Analysis template from Canvas Access latest industry information from the IBISWorld Industry Market Research Database within the college library. o Visit my.baker.edu o Select “Department Resources” o Select Academic Resource Center o Click on the “Library” icon o Click on the “Articles & Databases” icon o Scroll down to the business databases and select IBISWorld Industry Market Research o Enter Library number (if asked) o In the search box type Target’s NAICS Code: 45211 o Select “45211 - Department Stores in the US Industry Report” o Scroll down and select under “Major Players” Target Corporation o Use the information here for industry performance for competitors of Target for analysis Part I.

Financial Analysis in Excel (90 points) Section 1. Financial Statement Analysis (35 points) Please be sure to show all support for your work. You will be using the following sections of the annual report: MD&A, consolidated financial statements and notes to the financial statements. Complete the following tabs in the Excel template: A. Vertical Analysis - Income Statements B. Vertical Analysis – Balance Sheets C. Horizontal Analysis - Income Statements D. Horizontal Analysis – Balance Sheets Section 2. Ratio Analysis (35 points) Identify the appropriate formula and calculate the following ratios for the most recent two fiscal years (Market performance ratios (earnings per share, book value per share, price-earnings ratio, and dividend yield are already computed and included in the template.) NOTE : You will need to use the previous year’s reports in order to calculate averages where applicable. Complete the following ratios in the Excel template: • Measures of liquidityo Working capitalo Current ratioo Quick ratioo Inventory turnovero Average days to sell inventory• Measures of solvencyo Debt to assetso Debt to equityo Number of times interest earnedo Plant assets to long-term liabilities• Measures of profitabilityo Net margin (return on sales)o Asset turnovero Return on investmento Return on equity Section 3. Budgeting (20 points) In this section visit to access the previous three years annual reports NOT including the two fiscal years you have analyzed to calculate the following in the template . 1. Calculate the percentage change for each of the following categories of revenues and expenses the recent two fiscal years.2. Calculate the average percentage change3. Use the most recent two years data and the average percentage change calculated in Section 1 to prepare a budget for last year.

Part II. Written Analysis (90 Points) Complete the following components in your written analysis template  Cover Page  Section 1. Accounting Treatment (18 points) For this section, analyze and explain in detail the accounting treatment of the following areas for Target using the most recent annual report and disclosures. • Fixed Assets • Intangible Assets • Liabilities (long term and short)  Section 2. Trend Analysis (18 points) • Using the vertical analysis of the income statements, identify the significant trends • Using the vertical analysis of the balance sheets, identify the significant trends • Using the horizontal analysis of the income statements, identify the significant trends• Using the horizontal analysis of the balance sheets, identify the significant trends  Section 3.

Ratio Trend Analysis (18 points) • Using the ratio analysis, identify the trends in ratios between the last two years as well as compare to the industry information accessed from the IBIS database.• Also analyze ratios and figures based on the disclosures in the annual report as evidence to the noticeable trends  Section 4. Budgeting Analysis (18 points) • Compare actual amounts from last year to the budget you have created for sales. Give an analysis on if Target exceeded budgeted sales. If so, explain the contributing factors for this. If sales did not exceed what was budgeted, explain the contributing factors. • Compare actual amounts from last year to the budget you have created for expenses.

Give an analysis on if Target exceeded budgeted expenses. If so, explain the contributing factors for this. If expenses did not exceed what was budgeted, explain the contributing factors.  Conclusion  Reference List BUS3110_Comprehensive_Financial_Analysis_Calculations_StudentTemplate-2.xlsx Target.pdf written analysis template

Paper For Above instruction

Introduction

The comprehensive financial analysis of Target Corporation involves meticulous examination of its financial statements, ratios, industry position, and budgeting strategies. Using publicly available resources, including the company's Form 10-K, industry reports, and financial templates, this paper aims to provide a detailed understanding of Target’s financial health, trends, and strategic decisions. This analysis spans financial statement evaluation, ratio calculations, trend identification, and budgeting assessments, providing a comprehensive view of Target's financial positioning over recent fiscal years.

Resources and Data Collection

The analysis begins with sourcing Target’s two most recent fiscal year Annual Reports, available on the company’s investor relations website or SEC EDGAR database. The SEC’s EDGAR platform offers a user-friendly way to access the latest filings, ensuring the accuracy and completeness of data (U.S. Securities and Exchange Commission, 2023). In addition, the IBISWorld Industry Market Research Database within the college library provides industry context and competitive analysis, specifically focusing on the department store sector (IBISWorld, 2023).

The project also requires utilizing the Excel template provided on Canvas, which contains structured tabs for vertical and horizontal financial statement analysis, ratio calculations, and budgeting projections. Complementing this, the written analysis template guides the qualitative assessment of accounting treatments, trend analyses, and strategic insights. This combination of quantitative data and qualitative evaluation ensures a holistic understanding of Target’s financial stature.

Financial Statement Analysis

The first analytical phase involves vertical and horizontal analyses of Target’s income statements and balance sheets. Vertical analysis expresses each line item as a percentage of total revenue or total assets, revealing operational efficiencies and cost structures (Higgins, 2018). Horizontal analysis compares financial data over time to identify growth trends, decline patterns, or anomalies (Wild, Subramanyam, & Halsey, 2014).

Using the most recent two fiscal years, the vertical analysis of income statements demonstrates shifts in cost of goods sold, gross profit margins, and operating expenses, highlighting areas of cost management or escalation. Similarly, vertical analysis of the balance sheet examines changes in asset composition, liabilities, and shareholder equity. Horizontal analysis reveals year-over-year growth rates of revenues, expenses, assets, and liabilities, shedding light on the company’s expanding or contracting segments.

Ratio Analysis and Industry Comparison

Following the trend analysis, key financial ratios are computed to assess liquidity, solvency, and profitability. Liquidity ratios such as current ratio, quick ratio, and inventory turnover indicate Target's short-term financial health and operational efficiency (Brigham & Ehrhardt, 2019). Solvency ratios, including debt-to-asset and debt-to-equity, evaluate financial leverage and long-term stability, while profitability ratios like net margin, ROI, and ROE gauge operational effectiveness (Higgins, 2018).

These ratios are calculated for the last two fiscal years using data from the financial statements. The results are then compared to industry averages obtained from IBISWorld’s report for the department store industry (IBISWorld, 2023). Any significant deviations inform strategic insights, such as risk exposure, competitive positioning, or operational strengths.

Budgeting and Forecasting

The budget analysis encompasses reviewing Target’s past three years of financial reporting—excluding the analyzed two years—to calculate percentage changes in revenues and expenses. These changes inform the creation of a preliminary budget for the most recent year, applying average percentage adjustments for projecting future figures (Ross, Westerfield, & Jaffe, 2021). The budgeting process helps evaluate whether Target’s actual performance aligns with expectations, identifying areas for improving forecasting accuracy.

Discrepancies between actual results and budgeted figures are analyzed to understand contributing factors—such as market conditions, promotional campaigns, or supply chain issues—that influence operational outcomes. These insights aid in strategic planning and risk assessment.

Accounting Treatment and Trend Analysis

Target’s detailed disclosures in the MD&A and financial notes clarify accounting treatments for fixed assets, intangible assets, and liabilities. Fixed assets are capitalized and depreciated systematically, while intangible assets—like trademarks or goodwill—are evaluated for impairment annually (FASB, 2023). Liabilities are classified into current and long-term, with detailed recognition criteria outlined under GAAP standards (FASB, 2023).

Vertical and horizontal analyses reveal key trends, such as increasing or decreasing asset bases, shifts in liability management, and revenue or expense pattern changes. These trends reflect strategic decisions and operational efficiencies or challenges faced in recent years.

Ratio Trends and Industry Comparison

Trend analysis of ratios indicates whether Target’s liquidity, leverage, or profitability has improved or deteriorated over time. Comparing these trends to industry averages provides context—highlighting areas where Target leads or lags behind its competitors (IBISWorld, 2023). For instance, an improving debt-to-equity ratio suggests better leverage management, whereas declining liquidity ratios may signal increased short-term risks.

Assessing ratios alongside disclosures regarding operational changes—such as expansion initiatives, store remodels, or digital investments—further elucidates cause-and-effect relationships affecting financial health.

Budgeting Assessment and Strategic Insights

By comparing actual financial performance with the newly prepared budgets based on past percentage changes, Target’s management can evaluate operational effectiveness. Exceeding sales targets may stem from successful marketing campaigns or product assortments, while shortfalls could result from market saturation or supply chain disruptions. Similarly, expense variances—like lower inventory or administrative costs—provide efficiency insights.

These analyses inform strategic planning, helping management refine forecasting models, optimize resource allocation, and implement risk mitigation strategies.

Conclusion

This comprehensive financial analysis of Target Corporation utilizes rigorous quantitative methods complemented by qualitative insights. By evaluating financial statements, calculating key ratios, analyzing trends, and assessing budgeting practices, we gain a nuanced understanding of Target’s financial stability, operational efficiency, and strategic direction. Comparing company-specific findings with industry data contextualizes Target’s position, enabling informed decision-making for stakeholders.

References

• Brigham, E. F., & Ehrhardt, M. C. (2019). Financial Management: Theory & Practice. Cengage Learning.
• FASB. (2023). Accounting Standards Codification (ASC). Financial Accounting Standards Board.
• Higgins, R. C. (2018). Analysis for Financial Management. McGraw-Hill Education.
• IBISWorld. (2023). Department Stores in the US Industry Report. IBISWorld Industry Reports.
• Ross, S. A., Westerfield, R. W., & Jaffe, J. (2021). Corporate Finance. McGraw-Hill Education.
• U.S. Securities and Exchange Commission. (2023). EDGAR Database. https://www.sec.gov/edgar
• Wild, J. J., Subramanyam, K. R., & Halsey, R. F. (2014). Financial Statement Analysis. McGraw-Hill Education.