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Statement of Cash Flows for Target

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Refer to Target Corporation's financial statements (http://www.targetcorp.com/targetcorp_group/investor-relations/investor-relations.jhtml)

Target Corporation is currently seeking additional capital to expand its operations. Two companies have shown interest in providing additional capital.

Company #1 is interested in investing in the organization and, therefore, would like to have part ownership through the sale of new stock.
Company #2 is interested in providing a loan to the Target Corporation.
Both organizations need to know more about the financial stability of Target.

As an employee of Target, your supervisor needs you to write a memo in which you explain what information from the Target Corporation's financial statements will be highlighted when representatives of Target meet with each of these companies. In your memo, be sure to explain which information will be highlighted to Company #1 and which information will be highlighted to Company #2 and why. Explain any differences in the information that you have chosen to highlight.

Companies have two ways to finance their growth: equity financing or debt financing. In equity financing the company is selling stock to generate cash. What is the advantages and disadvantages of selling stock? Debt financing is taking out loans. Is there a difference in the information that a lender and an investor would want? Think back to some of the ratios that you learned about in the previous chapters, which would be of interest to the lender and which to the investor. What about the statement of cash flows, would this be useful? Again what is the advantages and disadvantages of loans? Based on your research into these two methods of financing, Explain any differences in the information that you have chosen to highlight.

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Solution Summary

This in-depth solution looks at Target Corporation's financial statements and calculates the net profit margin, return on equity, net profit after tax, return on asset, liquidity analysis, debt and interest coverage rates, debt to assets ratio and interest coverage ratio in an Excel file. It also includes a financial analysis conclusion of 1,842 words with references included.

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