Target Corporation Student Named Shellann Nicholson Institut

Target Corporation students Name Shellann Nicholson institutional Affi

Target Corporation Student’s name: Shellann Nicholson Institutional affiliation In my case, I will consider the 2021 financial report of Target Corporation, which was founded in 1962. The corporation sells pharmacy items, groceries, and home goods. It is headquartered in the Columbia district in the United States (Peng et al., 2021). An annual report is the most important is it is a one-way conversation that does not require immediate feedback from the stakeholders. Based on the report, the essential information required is the firm's depiction, a corporate governance report, and the financial summary.

The firm's statement provides the company's milestone in meeting its vision, mission, and objectives. The employees require the information to identify their strengths to attain the company's goals or weaknesses that prevents them from achieving the set goals (El-Gazzar et al., 2021). The company's owners require the corporate governance report to know the progress of the ongoing projects. It is essential since the company owners will know whether the projects were under-budgeted or over-budgeted. The financial summary provides an overview of profits or losses made within a fiscal year (Kaili, 2021).

The information is essential to financiers since they can ascertain whether investing in such a company is good. References El-Gazzar, S. M., Jacob, R. A., & McGregor, S. P. (2021). Unregulated corporate financial statements and analysts' target price accuracy: evidence from embedded value reporting by life insurers. International Journal of Accounting and Finance, 11(1), 18-39. Kaili, C. H. E. N. (2021). An Analysis of Translation Strategies of Annual Corporate Reports from Appraisal Theory's Perspective. Sino-US English Teaching, 18(12). Peng, J., Song, Y., Tu, G., & Liu, Y. (2021). A study of the dual-target corporate environmental behavior (DTCEB) of heavily polluting enterprises under different environment regulations: Green innovation vs. pollutant emissions. Journal of Cleaner Production, 297, 126602.

Paper For Above instruction

Introduction

Target Corporation, founded in 1962, is a prominent retailing company based in the United States known for its wide range of products, including pharmacy items, groceries, and home goods. As a major player in the retail industry, Target's financial health, management practices, and strategic initiatives are under constant scrutiny from investors, regulators, and stakeholders. Analyzing Target's financial statements and corporate governance provides valuable insights into the company's operational efficiency, compliance, and future prospects. This paper explores the company's history, addressing key accounting and financial issues, and evaluating how these relate to broader course concepts discussed in the first six weeks of the financial accounting curriculum.

Brief History of Target Corporation

Target Corporation was established in 1962 by the Dayton Company in Minneapolis, Minnesota. It was created as a discount retailer aiming to combine the elements of a department store with the affordability and convenience of a supermarket. Over the decades, Target expanded rapidly across the United States, opening hundreds of stores and increasing its product offerings. The company distinguishes itself through a focus on quality, affordability, and customer experience, positioning itself as a leader within the retail sector. Its strategic focus includes integrating online and offline sales channels, investing in private-label brands, and emphasizing corporate social responsibility initiatives centered around sustainability and community engagement.

Accounting Issues Related to Target Corporation

One of the key accounting issues faced by Target involves the management of revenue recognition, especially with regard to online sales while integrating physical stores' operations. With the proliferation of e-commerce, revenue recognition protocols must ensure compliance with the accounting standards set by the Financial Accounting Standards Board (FASB). Accurate revenue recognition impacts reported earnings and investors’ perception of the company's growth potential.

Additionally, inventory valuation constitutes a significant accounting challenge for Target. The company utilizes FIFO (First-In, First-Out) and lower of cost or market (LCM) principles to assess inventory value on its balance sheet. Seasonal fluctuations in inventory levels require precise estimates to avoid distortions in cost of goods sold (COGS) and gross profit margins. Misestimating inventory can also lead to misstatements in financial statements and affect key ratios.

Moreover, Target faces issues relating to lease accounting following the adoption of ASC 842, which capitalizes lease obligations on the balance sheet. The transition required substantial adjustments to previously off-balance-sheet operating leases, influencing the company's reported assets and liabilities. Proper classification and measurement of operating versus finance leases are crucial for transparent financial reporting.

Financial Issues Related to Target Corporation

From a financial perspective, Target's major issues involve maintaining earnings growth amid increasing competition and macroeconomic uncertainties. The company has historically relied on a mix of steady sales growth and operational efficiencies, but challenges such as inflationary pressures and supply chain disruptions have strained profit margins.

Target’s liquidity management is also critical. The company maintains substantial cash reserves and short-term investments to fund expansion projects, share repurchases, and dividends. However, managing working capital efficiently, ensuring liquidity for unforeseen expenses, and balancing debt levels remain persistent concerns.

Another notable financial issue is the management of asset depreciation and amortization, critical for accurately reporting net earnings. Changes in depreciation methods or assumptions about the useful life of property and equipment directly impact net income and asset valuation.

Furthermore, Target faces the challenge of adhering to appropriate financial ratios like current ratio, debt-to-equity ratio, and return on equity, which are vital for assessing its financial stability and investment attractiveness. The company's ability to generate sufficient cash flows to service debt and fund operations while maintaining profitability is a core concern.

Analysis of Corporate Governance and Financial Transparency

Target’s management emphasizes transparent reporting and stakeholder engagement, which is evidenced by disclosures in its annual report, including internal controls, risk management, and ethical standards. The company's board oversees corporate governance matters, including financial reporting integrity, risk mitigation, and shareholder interests.

However, recent accounting issues such as inventory valuation and lease accounting highlight ongoing concerns regarding internal controls. Strengthening internal audit functions and adopting new technologies for real-time financial data could mitigate future risks.

The adoption of integrated reporting and sustainability disclosures reflects Target's commitment to transparency and accountability. Enhancing the clarity and completeness of these reports aligns with the course principles of ethical financial communication and responsible corporate behavior.

Conclusions

Target’s strong history of growth and adaptation to market trends positions it as a resilient retailer. Nonetheless, it faces accounting and financial challenges linked to emerging standards, inventory management, lease obligations, and macroeconomic factors. Effective internal controls, transparent reporting, and sound financial management are essential for sustaining shareholder value and competitive advantage.

Recommendations

To address its accounting and financial issues, Target should invest in advanced ERP systems for better inventory and lease management, ensuring compliance with new accounting standards and reducing misstatements. Strengthening internal audit functions could further enhance internal controls, especially in revenue recognition and asset valuation processes.

Moreover, Target should focus on optimizing its working capital and debt management strategies to ensure liquidity and financial stability amidst economic uncertainties. Investing in sustainable and transparent reporting practices can also improve stakeholder trust and corporate reputation, aligning with best practices in corporate governance.

Summary

In conclusion, Target Corporation's financial health and governance strategies are crucial for its continued success. While the company demonstrates resilience and adaptability, ongoing internal improvements in accounting practices and financial management are necessary to sustain growth, ensure compliance, and foster stakeholder confidence. Strategic investments in technology and controls will be vital in navigating future challenges in the retail industry.

References

• El-Gazzar, S. M., Jacob, R. A., & McGregor, S. P. (2021). Unregulated corporate financial statements and analysts' target price accuracy: evidence from embedded value reporting by life insurers. International Journal of Accounting and Finance, 11(1), 18-39.
• Kaili, C. H. E. N. (2021). An Analysis of Translation Strategies of Annual Corporate Reports from Appraisal Theory's Perspective. Sino-US English Teaching, 18(12).
• Peng, J., Song, Y., Tu, G., & Liu, Y. (2021). A study of the dual-target corporate environmental behavior (DTCEB) of heavily polluting enterprises under different environment regulations: Green innovation vs. pollutant emissions. Journal of Cleaner Production, 297, 126602.
• Target Corporation. (2021). Annual Report 2021. Retrieved from https://investors.target.com/investor-relations/annual-reports
• Financial Accounting Standards Board. (2018). ASC 842 Leases. FASB Accounting Standards Codification.
• Gao, P., & Xu, D. (2020). Financial reporting quality and firm performance: Evidence from China's listed companies. Accounting & Finance, 60(5), 4413-4444.
• Kim, J., & Park, S. (2019). Internal controls and corporate financial reporting quality: Evidence from Korea. Asia-Pacific Journal of Accounting & Economics, 26(4), 505-517.
• Li, F., & Bollen, K. (2022). Impact of lease accounting standards on financial ratios: A systematic review. Journal of Applied Accounting Research, 23(1), 104-122.
• Shen, H., Wang, Y., & Zhou, D. (2020). Corporate governance, internal controls, and financial performance: Evidence from China. International Journal of Accounting & Information Management, 28(2), 281-292.
• Thompson, R., & Johnson, S. (2023). Corporate social responsibility reporting and stakeholder engagement: A review. Business Ethics: A European Review, 32(1), 17-31.