Course Projec
ACCT504
Professor Morrison
Target vs. Walmart
ACCT504
Professor Morrison
Measuring Ability to Pay Current Liabilities: Target and Walmart's current ratio have a .03 different meaning that both comapnies have a high chance of paying off their debts if they need arises.
Measuring Turnover: Walmart has the advantage for the inventory turnover and accounts receivable turnover ratios.
Walmart turns over their inventory 10.1 times to Target's 6.1 times and Walmart turns over their accounts receivable 4 times to Target's 13.1 times.
Measuring Leverage- Overall Ability to Pay Debts: Target and Walmart have about the same debt to asset ratio with a difference; Walmart has a 63.6% and Target with 62% ratio. Far as the times-interest-earned Target has Walmart beat w
11.6 to Walmart's 3.8, meaning Target can cover their interest expense 11.6 times with income before taxes and intere and Walmart can only cover 3.6 times.
Measuring Profitability: The advantage isn't high but Target is in the lead. Target has 7.5% more than double of Walma
3.4%. Target also has a higher gross profit rate almost double that of Walmart by 41.9%, while Walmart has a 25%.
Analyzing Stock as an Investment: Target returns a 0.7% dividend yield to their investors while Walmart's yield is 0.6%
Target has positive free cash flow of $6,249 million while Walmart has positive free cash flow of $10,959 million. Free cash flow can be used to undertake acquisitions, pay additional dividends, pay down debt, or buy back stock.
Conclusion: Walmart is the better investment after a careful analysis of their financials. Even though Target's financi are not bad, they still are not as good as Walmart's. I believe that a lot of Target's profitability ratios were affected in
November when they had the giant credit scam before the holiday season. I believe that made consumers weary of shopping with Target, and a time when most retail stores have surge in customer sales Target wasn't
Professor Morrison
Target vs. Walmart
ACCT504
Professor Morrison
Measuring Ability to Pay Current Liabilities: Target and Walmart's current ratio have a .03 different meaning that both comapnies have a high chance of paying off their debts if they need arises.
Measuring Turnover: Walmart has the advantage for the inventory turnover and accounts receivable turnover ratios.
Walmart turns over their inventory 10.1 times to Target's 6.1 times and Walmart turns over their accounts receivable 4 times to Target's 13.1 times.
Measuring Leverage- Overall Ability to Pay Debts: Target and Walmart have about the same debt to asset ratio with a difference; Walmart has a 63.6% and Target with 62% ratio. Far as the times-interest-earned Target has Walmart beat w
11.6 to Walmart's 3.8, meaning Target can cover their interest expense 11.6 times with income before taxes and intere and Walmart can only cover 3.6 times.
Measuring Profitability: The advantage isn't high but Target is in the lead. Target has 7.5% more than double of Walma
3.4%. Target also has a higher gross profit rate almost double that of Walmart by 41.9%, while Walmart has a 25%.
Analyzing Stock as an Investment: Target returns a 0.7% dividend yield to their investors while Walmart's yield is 0.6%
Target has positive free cash flow of $6,249 million while Walmart has positive free cash flow of $10,959 million. Free cash flow can be used to undertake acquisitions, pay additional dividends, pay down debt, or buy back stock.
Conclusion: Walmart is the better investment after a careful analysis of their financials. Even though Target's financi are not bad, they still are not as good as Walmart's. I believe that a lot of Target's profitability ratios were affected in
November when they had the giant credit scam before the holiday season. I believe that made consumers weary of shopping with Target, and a time when most retail stores have surge in customer sales Target wasn't
Bibliography: TGT-2014.02.01-10K. (2014, February 1). TGT-2014.02.01-10K. Retrieved June 22, 2014, from https://www.sec.gov/Archives/edgar/data/27419/000002741914000014/tgt-20140201x10k.htm . (n.d.). . Retrieved June 22, 2014, from http://finance.yahoo.com/q/is?s=TGT+Income+Statement&annual Financial Summary: Target 2013 Annual Report | Target Corporate June 22, 2014, from https://corporate.target.com/annual-reports/2013/financials/financial-summary Wal-Mart Stores, Inc.: NYSE:WMT quotes & news - Google Finance. (n.d.). Wal-Mart Stores, Inc.: NYSE:WMT quotes & news June 23, 2014, from https://www.google.com/finance?q=NYSE:WMT&fstype=ii . (n.d.). . Retrieved June 23, 2014, from http://finance.yahoo.com/q/is?s=WMT+Income+Statement&annual