Target Corporation Common Size Income Statement Total revenue Cost of sales Selling, general and administrative expenses Depreciation and amortization (exclusive of depreciation included in cost of sales) Operating income 12 Months Ended Percentages Jan. 29, 2022 Jan. 30, 2021 Jan. 28, 2023 Jan. 29, 2022 $ 106,005 74,963 19,752 2,344 8,946 Jan. 28, 2023 $ 109,120 82,229 20,658 2,385 $ 93,561 66,177 421 (382) 18,615 2,230 6,539 977 16 Jan. 30, 2021 3,848 Net interest expense 478 Net other (income) / expense (48) 3,418 8,907 5,546 Earnings before income taxes Provision for income taxes Net earnings 638 1,961 1,178 $ 2,780 $ 6,946 $ 4,368 a. Review the vertical analysis and provide the two largest expenses for the current year. Explain the trend over the three years for these two expenses and discuss how these costs affects net earnings. b. Discuss the fluctuations in interest expense. What are reasons that could cause changes in interest expense? You need to provide specific causes for the applicable company that relates specifically to the interest expense. c. Discuss the fluctuations in income tax expense. What are reasons that could cause changes in income tax expense? You need to provide specific causes for the applicable company that relates specifically to the income tax expense. d. Was the company more or less profitable when compared to the prior year? Using the specific income statement ratios or amounts, explain what caused the change in income from the prior year.
Target Corporation Common Size Income Statement Total revenue Cost of sales Selling, general and administrative expenses Depreciation and amortization (exclusive of depreciation included in cost of sales) Operating income 12 Months Ended Percentages Jan. 29, 2022 Jan. 30, 2021 Jan. 28, 2023 Jan. 29, 2022 $ 106,005 74,963 19,752 2,344 8,946 Jan. 28, 2023 $ 109,120 82,229 20,658 2,385 $ 93,561 66,177 421 (382) 18,615 2,230 6,539 977 16 Jan. 30, 2021 3,848 Net interest expense 478 Net other (income) / expense (48) 3,418 8,907 5,546 Earnings before income taxes Provision for income taxes Net earnings 638 1,961 1,178 $ 2,780 $ 6,946 $ 4,368 a. Review the vertical analysis and provide the two largest expenses for the current year. Explain the trend over the three years for these two expenses and discuss how these costs affects net earnings. b. Discuss the fluctuations in interest expense. What are reasons that could cause changes in interest expense? You need to provide specific causes for the applicable company that relates specifically to the interest expense. c. Discuss the fluctuations in income tax expense. What are reasons that could cause changes in income tax expense? You need to provide specific causes for the applicable company that relates specifically to the income tax expense. d. Was the company more or less profitable when compared to the prior year? Using the specific income statement ratios or amounts, explain what caused the change in income from the prior year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Calculate the common size percentages and answer the questions below.
Transcribed Image Text:### Target Corporation Common Size Income Statement
#### 12 Months Ended
- **Jan. 28, 2023**
- Total revenue: $109,120
- Cost of sales: $82,229
- Selling, general and administrative expenses: $20,685
- Depreciation and amortization (exclusive of depreciation included in cost of sales): $2,385
- Operating income: $3,848
- Net interest expense: $478
- Net other (income) / expense: $(48)
- Earnings before income taxes: $3,418
- Provision for income taxes: $638
- Net earnings: $2,780
- **Jan. 29, 2022**
- Total revenue: $106,005
- Cost of sales: $74,963
- Selling, general and administrative expenses: $19,752
- Depreciation and amortization (exclusive of depreciation included in cost of sales): $2,344
- Operating income: $8,946
- Net interest expense: $421
- Net other (income) / expense: $(382)
- Earnings before income taxes: $8,907
- Provision for income taxes: $1,961
- Net earnings: $6,946
- **Jan. 30, 2021**
- Total revenue: $93,561
- Cost of sales: $66,177
- Selling, general and administrative expenses: $18,615
- Depreciation and amortization (exclusive of depreciation included in cost of sales): $2,230
- Operating income: $6,539
- Net interest expense: $977
- Net other (income) / expense: $(369)
- Earnings before income taxes: $5,546
- Provision for income taxes: $1,178
- Net earnings: $4,368
#### Percentages
- January 29, 2022
- January 30, 2021
---
### Analysis and Explanations
#### a. Review the vertical analysis and provide the two largest expenses for the current year. Explain the trend over the three years for these two expenses and discuss how these costs affect net earnings.
#### b. Discuss the fluctuations in interest expense. What are reasons that
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