ACC 610 5-2

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1 ACC 610 Milestone Three Guidelines and Rubric Oaikhena Callistus Southern New Hampshire University ACC-610-Q1008 Financial Reporting . Instructor Charles Cullinan November 5 th , 2023

2 Based on the information you have gathered, explain the changes in financial ratios. Has anything changed in the few years of financial statements that you have obtained? What are the reasons for these changes? In the past three years, the financial reports from Target Brand Inc. have dropped in the net earnings from 2015 to 2017. Furthermore, in that year (2015), the company reported net earnings of approximately $3.363 million, with a decrease in the net income of about $2.737 million in 2016. Furthermore, between 2016 and 2017, there was an increase of $2.934 million. Nevertheless, there was a decrease in targets, inc. over the years. (Target Brands Inc, 2017). The downslide in the net income from 2015 to 2016 resulted from the discontinuation of its operation in Canada, Explained in Note 7 of the Financial Statements about why there was Canadian discontinuation. (Target Brands Inc, 2016) In the process of Canadian subsidiaries' filing and deconsolidation in 2015, they continued to settle right into the 2016 financial period. Based on the information you have gathered, analyze the changes in the financial reports regarding cash. Be sure to examine the statement of cash flows. What are the reasons for these changes? According to Target Brands' 2016 annual records, there was an increase in 2015 to 2016 per cash requirements for funding activities. Furthermore, in 2015, the cost of funding these activities was summed up to be $4.630 million, then an incline in the year 201 that is summed up to $5.497 million. Utilizing the available information, Cash at hand and Cash equivalents at the end of the accounting period dropped by $1.534 million between 2015 and 2016, with an increment of $ 131,000 from 2016 to 2017. by breaking down Target Brands' latest financial statement, you conclude that there has been consistency overall from 2015 to 2017. Furthermore, such an

3 explanation for that consistency can result from the company's management continually analyzing current and prior year values, which includes using information when making the budget. The critical changes to Target Brands' cash in financial activities regard the summation of long- term debts and stock repurchases in 2016. However, in 2017, Target Brand issued unsecured fixed-rate debt, repurchased debt at the market value of $463 million, and caused a loss in retiring early. Based on the information you have gathered, analyze the changes in the financial reports regarding the account balance. What are the reasons for these changes? The account balance is the monetary amount in the financial reserve at any specific point and includes numerous activities involved with the company. Regarding the 2017 annual reports, the company account balance declined from 2015 to 2016. However, it also got back up from 2016 to 2017, and the cause for the changes was the company's discontinuation of its subsidiary in Canada in 2015 (January 15). In March 2016, Target got involved in a settlement with its Canadian subsidiaries and all the previous landlords. Regarding the settlement, the company agreed to an intercompany subordinate claim deed that instructed them to contribute cash to Target Brand Canada's estate. In return, Target Brand's debt was taken in under the guarantees of specific leases of the subsidiaries. (Target Brands Inc, 2017). Throughout 2016, the company received $182 million, and $16 million in 2017 from Canadian estate, and also contributed $ 27 million in 2016. Furthermore, related current assets affected are the income tax and receivables, vendor income, and prepaid expenses in conjunction with pharmacy-related receivables (pharmacy and clinic assets).

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4 Describe the valuation method your company uses and explain why it uses it. What are the benefits of this method? Target currently practices a retail inventory accounting method. The utilization of this system is to calculate the worth of an account ending roughly by utilizing the retail price ratio (Jan 2013), and the retail method is also useable with FIFO (First in, first out), LIFO (Last in, First off)/ the weighted average cost flow consumption. Congruous with the Company's 2017 Annual report, the Catalog has scheduled at least LIFO cost or the value in the market. The LIFO method operates under the speculation that the final inventory that was bought is the first one that they sell out (Bragg, 2017), and by utilizing this LIFO estimated method plus the cost-to-retail ratio, The Company's inventory will have a lower value or market because of the irreversible markdown taken as a result of inventory reduction in value. The valuation method of LIFO is in utilization with the thought that inventory prices incline with time, which means that as time goes by, the inventory cost increases, and by utilizing LIFO during inflated prices times, The cost of inventory recently obtained will be higher than the cost of the previous purchases made at this moment resulting to the ending inventory to have the same value as the prior one and the latest price display in the cost of goods sold, relocating expensive inventory to cost of goods sold might reduce the accounted margin of profitability thereby postponing income taxes recognition. Based on industry trends, plans of your company, and the information you have gathered, predict how your company will perform in the following year compared to competitors.

5 According to information retrieved from TARGET BRAND's Annual Reports, industry trends, and plans, I foresee that the company will steadily increase progressively and inclination in profitable digits. The organization's dedication is to its consumers and includes its team members and shareholders; the company continually handles the wants and needs to satisfy everyone. Target has proven itself amid social crises and tribulations, including pandemics, Gender understanding, and the demand and supply rate. Target is always welcoming new ideas to work for the satisfaction of customers' wants. Its philanthropic endeavors, which include its program establishments like the CHARGE OF EDUCATION PROGRAM, have given out more than $460 million to schools nationwide with the idea of product improvement. Its sustaining ability to remain an all-season business clearly shows that its growth is unstoppable, and its success as an organization will be limitless in the future. References: Jan, I. (2013). Retail Method of Inventory Estimation. Retrieved August 19, 2018, from https://accountingexplained.com/financial/inventories/retail-method. Target Brands Inc. (2016). 2017 Annual Report. Retrieved August 19, 2018, from https://corporate.target.com/annual-reports/2017. Bragg, S. (2017, August 7). Last in, first out method | LIFO inventory method. Retrieved August 19, 2018, from https://www.accountingtools.com/articles/2017/5/13/last-in-first-outmethod-li Target Brands Inc. (2016). 2016 Annual Report. Retrieved August 19, 2018, from https://corporate.target.com/annual-reports/2016.