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b. Compare the liquidity, solvency, and profitability of the two companies.

b. Compare the liquidity, solvency, and profitability of the two companies.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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QUESTION 8 P18-5A P14.5A (LO 3) are presented here (in millions). Compute selected ratios, and compare liquidity, profitability, and solvency for two сотрanies. Suppose selected financial data of Target and Wal-Mart for 2020 Wal-Mart Target Corporation Stores, Inc. Income Statement Data for Year Net sales $65,357 $408,214 Cost of goods sold 45,583 304,657 Selling and administrative expenses 15,101 79,607 L Wal-Mart Target Corporation Stores, Inc. Interest expense 707 2,065 Other income (expense) (94) (411) Income tax eхрense 1,384 7,139 $ 2,488 Balance Sheet Data (End of Year) Net income $ 14,335 Current assets $18,424 $ 48,331 Noncurrent assets 26,109 122,375 Total assets $44,533 $170,706 Current liabilities $11,327 $ 55,561 Long-term debt Total stockholders' equity 17,859 44,089 15,347 71,056 Total liabilities and stockholders' equity $44,533 $170,706 Beginning-of-Year Balances Total assets $44,106 $163,429 Total stockholders' equity 13,712 65,682 Current liabilities 10,512 55,390 Total liabilities 30,394 97,747 Other Data Average net accounts receivable $ 7,525 $ 4,025 Average inventory 6,942 33,836 Net cash provided by operating activities 5,881 26,249 Capital expenditures 1,729 12,184 Dividends 496 4,217 Instructions a. For each company, compute the following ratios. •1. Current ratio. • 2. Accounts receivable turnover. •3. Average collection period. •4. Inventory turnover. •5. Days in inventory. •6. Profit margin. •7. Asset turnover. •8. Return on assets. •9. Return on common stockholders' equity. • 10. Debt to assets ratio. • 11. Times interest earned. L • 12. Free cash flow. b. Compare the liquidity, solvency, and profitability of the two companies.
Transcribed Image Text:QUESTION 8 P18-5A P14.5A (LO 3) are presented here (in millions). Compute selected ratios, and compare liquidity, profitability, and solvency for two сотрanies. Suppose selected financial data of Target and Wal-Mart for 2020 Wal-Mart Target Corporation Stores, Inc. Income Statement Data for Year Net sales $65,357 $408,214 Cost of goods sold 45,583 304,657 Selling and administrative expenses 15,101 79,607 L Wal-Mart Target Corporation Stores, Inc. Interest expense 707 2,065 Other income (expense) (94) (411) Income tax eхрense 1,384 7,139 $ 2,488 Balance Sheet Data (End of Year) Net income $ 14,335 Current assets $18,424 $ 48,331 Noncurrent assets 26,109 122,375 Total assets $44,533 $170,706 Current liabilities $11,327 $ 55,561 Long-term debt Total stockholders' equity 17,859 44,089 15,347 71,056 Total liabilities and stockholders' equity $44,533 $170,706 Beginning-of-Year Balances Total assets $44,106 $163,429 Total stockholders' equity 13,712 65,682 Current liabilities 10,512 55,390 Total liabilities 30,394 97,747 Other Data Average net accounts receivable $ 7,525 $ 4,025 Average inventory 6,942 33,836 Net cash provided by operating activities 5,881 26,249 Capital expenditures 1,729 12,184 Dividends 496 4,217 Instructions a. For each company, compute the following ratios. •1. Current ratio. • 2. Accounts receivable turnover. •3. Average collection period. •4. Inventory turnover. •5. Days in inventory. •6. Profit margin. •7. Asset turnover. •8. Return on assets. •9. Return on common stockholders' equity. • 10. Debt to assets ratio. • 11. Times interest earned. L • 12. Free cash flow. b. Compare the liquidity, solvency, and profitability of the two companies.
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