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Student’s name
Professor’s name
Course
Date
Financial Analysis and Interpretation – Target Inc.
Horizontal Analysis
Income Statement

Percentage
Increase(Decrease
Assets 2020 2019 Amount )
$75,35
Net sales Income $78,112 6 $2,756 3.66%

Expenses
$53,04
Cost of Goods $54,617 9 $1,568 2.96%
$15,63
Selling and General Expenses $16,210 1 $579 3.70%
Other expenses $4,016 $3,746 $270 7.21%
$72,42
Total Expenses $74,843 6 $2,417 3.34%

Net Income $3,269 $2,930 $339 11.57%

Income analysis for Target Inc. indicates an upward trajectory. An increase in net sales and
income shows a steady financial performance by the enterprise. In all financial fronts,
subsequent increases in expenses imply the company extended its operations in 2020 unlike in
2019.
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Horizontal Analysis
Balance Sheet

Assets 2020 2019 $Change %change

Cash $2,577 $1,556 $1,021
Accounts Receivables $962 $1,100 -$138 -12.5%
Inventories $8,992 $9,497 -$505 -5.3%
Prepaid Expenses $154 $157 -$3 -1.9%
$28,98
Net, Equipment $30,094 0 $1,114 3.8%
$41,29
Total Assets $42,779 0 $1,489 3.6%

Liabilities and Stockholders’ Equity

Accounts Payables $9,920 $9,761 $159 1.6%
$18,58
Salaries and Wages Payables $19,543 0 $963 5.2%
Notes Payables $1,483 $1,652 -$169 -10.2%
$29,99
Total Liabilities $30,946 3 $953 3.2%

Common Stock $5,400 $5,280 $120 2.3%

Retained Earning $6,433 $6,017 $416 6.9%
$41,29
Total Liabilities and Stockholders’ Equity $42,779 0 $1,489 3.6%

A change in total assets shows a percentage rise of 3.6%, common stock 2.3%, and account
payables 1.6%. Drastic declines are salient for inventories -5.3% and notes payable -10.2%
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Vertical Analysis
Income Statement

Assets 2020 2019 2020 2019

Sales Revenue Net $78,112 $75,356 100.0% 100.0%

Cost of Goods $54,617 $53,049 69.9% 70.4%

Gross profit $23,495 $22,307 30.1% 29.6%

Operating Expenses $108 $105 0.1% 0.1%

Income from Operations $23,387 $22,202 29.9% 29.5%

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Vertical Analysis
Balance Sheet
Balance sheet
Assets 2020 2019 2020 2019
Cash $2,577 $1,556 6% 4%
Accounts Receivables $962 $1,100 2% 3%
Inventories $8,992 $9,497 21% 23%
Prepaid Expenses $154 $157 0% 0%
Net. Equipment $30,094 $28,980 70% 70%
Total Assets $42,779 $41,290 100% 100%

Liabilities and Stockholders’ Equity

Accounts Payables $9,920 $9,761 23.19% 23.64%
Salaries and Wages Payables $19,543 $18,580 45.68% 45.00%
Notes Payables $1,483 $1,652 3.47% 4.00%
Total Liabilities $30,946 $29,993 72.34% 72.64%

Common Stock $5,400 $5,280 12.62% 12.79%

Retained Earning $6,433 $6,017 15.04% 14.57%
Total Liabilities and Stockholders’
Equity $42,779 $41,290 100.00% 100.00%
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Liquidity
Working Capital and Current Ratio - Current Position

2020 2019
Cash $2,577 $1,556
Accounts Receivables $962 $1,100
Inventory $8,992 $9,497
Equipment $30,094 $28,980
Accounts Payable $9,920 $9,761
Long-term Debt $13,613 $12,227
Current Assets $12,531 $12,153
Current Liabilities $9,920 $9,761
Working Capital $2,611 $2,392

Capital Ratio 1.26 1.25

The level of working capital and current ratio indicates an increase in 2020 from the previous
value in 2019. The working capital increased from $2,392 to $2,691 while the current ratio
increased from 1.25 to 1.26. Current ratio is a measure of the company’s ability to settle its short-
term liabilities (payables and debts) with its short-term assets (cash, inventory, and receivables).
A higher current ratio indicates the company’s capacity to settle its obligations. The current ratio
of 1.26 informs that target is able to pay its debt .26 more than the company is owed.
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Solvency

2020 2019
Fixed Assets $48,183 $46,185
Long term Liabilities $13,613 $12,227
Ratio 3.54 3.78

Liabilities to Stockholders’ Equity

2020 2019
Liabilities $30,946 $29,993
Stockholders’ Equity $11,833 $11,297
Ratio 2.62 2.65

2020 2019
EBITDA $7,285 $6,676
Interest expenses $468 $459
Times interest Earned 15.57 14.54

The company’s insolvency indicates a fundamental source of bankruptcy risk of the firm.
Solvency indicates the capacity of the corporation to cover its obligations resulting from current
operations and previous contracts. The solvency ratio for 2019 is higher (3.73) than that for 2020
(3.54). This is a high ratio indicating the company’s ability to pay out claims.
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Profitability

2020 2019

Total Assets $42,779 $41,290

Revenue $78,112 $75,356

Asset Turnover Ratio 1.83 1.83

Asset turnover ratio for the company remained constant at 1.83 between 2019 and 2020. This
statistic indicates a stagnated difference in net sales between the two financial years. This ratio is
a good indicator of the company’s efficiency in utilizing assets and investors view this measure
positively when channeling investments.

Rates of Return on Total Assets

2020 2019

EBIT $4,681 $4,380

Total Assets $42,779 $41,290

Rates of Return 10.94% 10.61%

Return on assets (ROA) indicates the degree of profitability for the company relative to its total
assets. This is an efficient indicator of the company’s utilization of assets to generate revenues.
The higher the rate of return the better the organization’s financial performance. The metrics
indicate a rate of 10.61% for 2019 and 10.94%for 2020, implying that the company’s
profitability is on an upward trend.
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Rate of Return on Stockholder's Equity 2020 2019

Net income $3,269 $2,930

Stockholder's equity $11,833 $11,297

Rate of Return 27.63% 25.94%

The higher the percentage of return on stockholders’ equity implies that more money is
reimbursed to investors. There is a rise in rate of return from 25.94% in 2019 to 27.63% in 2020.
This is a clear-cut indicator of Target Inc. having financial muscles to remit remunerations to its
investors.

Rate of Return on Common Stockholder's equity

2020 2019
Net Income $3,269 $2,930
Dividend $333 $331
Common stockholder's equity $11,833 $11,297
Rate of Return 24.81% 23.01%

2020 2019
Net Income $3,269 $2,930
Outstanding Shares $511 $529
EPS 6.40 5.54
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This metric indicates an increase from 23.01% in 2019 to 24.81% in 2020. By dividing the
earnings after tax by equity in common shares, the results indicate a change through a rise in
percentage from 2019 to 2020. Thus Target Inc. shows greater returns to shareholders as they
reflect on their investments.
Work Cited
"TGT | Target Corp. Annual Cash Flow - WSJ". Wsj.Com, 2021, https://www.wsj.com/market-
data/quotes/TGT/financials/annual/cash-flow.
"TGT | Target Corp. Financial Statements - WSJ". Wsj.Com, 2021, https://www.wsj.com/market-
data/quotes/TGT/financials.