Problem 2-7A
Selected financial data of two competitors, Target and Wal-Mart, are presented here. (All dollars are in millions.) Suppose the data were taken from the 2017 financial statements of each company.
| Target (1/31/17) |
Wal-Mart |
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Income Statement Data for Year |
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| Net sales |
$62,500 |
$401,244 |
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| Cost of goods sold |
41,750 |
305,347 |
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|
15,875 |
69,415 |
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| Interest expense |
1,188 |
2,407 |
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| Other income |
26 |
4,213 |
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| Income taxes |
1,389 |
9,838 |
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| Net income |
$ 2,324 |
$ 18,450 |
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|
Target |
Wal-Mart |
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Balance Sheet Data (End of Year) |
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| Current assets |
$16,800 |
$ 49,400 |
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| Noncurrent assets |
25,300 |
112,000 |
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| Total assets |
$42,100 |
$161,400 |
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| Current liabilities |
$11,400 |
$ 56,700 |
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| Long-term liabilities |
20,000 |
44,900 |
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| Total stockholders’ equity |
10,700 |
59,800 |
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| Total liabilities and stockholders’ equity |
$42,100 |
$161,400 |
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| Net cash provided by operating activities | $4,480 | $24,500 | ||
| Cash paid for capital expenditures | $3,440 | $11,800 | ||
| Dividends declared and paid on common stock | $480 | $3,700 | ||
| Weighted-average shares outstanding (millions) | 770 | 4,000 | ||
For each company, compute these values and ratios. (All Dollars Are in Millions) (Round Current ratio and Earnings per share to 2 decimal places, e.g. 15.25 and Debt to assets ratio to 1 decimal place, e.g. 78.9%. If answer is negative enter it with a negative sign preceding the number e.g. -15,000 or in parentheses e.g. (15,000).)
| Target | Wal-Mart | ||||||||
| (a) | Working capital | $ |
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$ |
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| (b) | Current ratio |
:1 |
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:1 | |||||
| (c) | Debt to assets ratio |
% |
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% | |||||
| (d) | Free cash flow | $ |
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$ |
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| (e) | Earnings per share | $ |
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$ |
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| (f) | Which company has better liquidity? |
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| Which company has better solvency? |
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