Project 2 Milestone_Alicia Wilkinson
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Alicia Wilkinson
FIN 320: Principles of Finance
Southern New Hampshire University
November 28, 2021
Project Two Milestone: Comparison Analysis
In the financial formula spreadsheet, I have included a tab for the Q3 2021 and Q3 2020 financials. I found this to be an easy way to compare the numbers across the year to see what changes have happened. Below is a table summarizing the differences.
Type
Q3 2021
Q3 2020
Working capital
(775,000.00)
952,000.00 Current ratio
0.97 1.05 Debt ratio
0.75 0.74 Earnings per share
3.09 2.02 Price/earnings ratio
75.25 78.32 Total asset turnover ratio
0.47 0.45 Financial leverage
3.94 3.80 Net profit margin
0.06 0.04 Return on assets
0.03 0.02 Return on equity
0.11 0.08 Over the course of the year, Target’s current ratio has decreased by 0.04 but their working capital has gone from a positive $952,000 to a negative $775,000. Even though these numbers are in a downward trend, it is such a small trend that I don’t think that it is detrimental to the company. Their debt-to-income ratio has only increase by 0.01, so I don’t think that they have incurred a significantly more amount of debt. I also think that increase in the EPS is worth notating, going from $2.01 to $3.04. The balance sheet, income statement, retained earnings and cash flow state were all available on Mergent and in my opinion I think that this is a full picture of the company’s financial health, which appears to be in good standing.
Short-term financing is normally used for a company’s operational needs and provides shorter maturities than long-term financing would. This makes short-term financing better suited for fluctuations in working capital or other ongoing operational expenses. Since overall Target doesn’t seem too impacted by their negative working capital this quarter, it may be beneficial for
them to increase their short-term financing in order to remain positive. I would, however, suggest
waiting to see how the numbers for Q4 turn out before jumping into financing. Since the ratio’s had such small differences and the numbers overall are trending upwards, it may be worth waiting to ensure that the financing is actually needed.
Reference
Mergent. (2021, November 28). Target
. Retrieved November 28, 2021, from https://www.mergentonline.com/login/php
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