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# Wal-Mart & Target, stock, beta, dividend, splits, yield, PE

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1. What is the market price for Wal-Mart common stock?
2. What is the Beta for Wal-Mart?
3. If the market yield on S&P 500 stocks is 10.0% and 90 day U.S Treasury yield is 0.5%, what is Wal-Mart's required return?
4. What is the dividend that was just paid? Has the stock had any splits? If so, when?
5. What is the dividend payout ratio?
6. What is the (forward annual) dividend yield?
7. What is the (trailing) price-earnings ratio?
8. If earnings are expected to grow 1%, what would be the value of the stock? Use Do=\$4.00
9. At the market price, and given the value you calculated, should you buy Wal-Mart stock? Why?
10. What is the market value of Wal-Mart's equity?
11. Now do the same thing for Target Corp. What is the Beta for Target?
12. What is the market price of Target common stock (for one share)?
13. If the market yield on S&P 500 stocks is 10.00% and 90-day U.S Treasury yield is .5% what is Target's required return?
14. What is the dividend?----------------- By what date did you have to own the stock to receive the last dividend?
15. What is the dividend payout ratio?
16. What is the (forward annual) dividend yield?
17. What is the (trailing annual) price- earnings ratio?
18. If earnings are expected to drop by 10%, what would be the value of the stock? Use D1= \$2.50
19. At the market price, and given the value you calculated, should you buy Target stock? Why
20. Which stock has more risk, Wal-Mart or Target? Explain why.
21. Now look up the Target corporate bond maturing 15-August-2010. Print out the info on this bond.
22. What is its price? And what is its rating?
23. What is the YTM? (no calculation)
24. What is the coupon rate?
25. How often do you get paid interest?
26. What is the amount of annual interest you get for owning one bond?
27. Suppose interest rates change to 4%, what would happen to the price of the Target bond?

Please answer all questions and return by Feb, 27, 2009. All questions may be answered by referencing www.finance.yahoo.com and searching for each company by looking up the ticker code. If you do not know the ticker code, then look it up in the tool bar. All stock information is from the key statistics section, except for the price which is from the summary page. The bond information can be found by clicking on bonds at the tool bar and typing in the company name.

#### Solution Summary

The solution provides various details for Wal-Mart and Target

\$2.19

What is the Solvency of the company(walmart) as measured by the below listed ratios? How has it changed over the last five years? How does it compare to its industry or its competitors?

Liquidity Ratios

Current Assets
Current Ratio = ---------------------------
Current Liabilities

Cash + Marketable Securities + Accounts Receivable
Quick Ratio =
------------------------------------------------------------------------
--------
Current Liabilities

Cash + Marketable Securities
Cash Ratio = ---------------------------------------------
Current Liabilities

Current Assets - Inventory
Acid Test Ratio = -----------------------------------------
Current Liabilities

Cash Flow from
Operations
Cash Flow from Operations Ratio =
-----------------------------------------
Current
Liabilities

Activity Ratios

Cost of Goods Sold
Inventory Turnover = ----------------------------------------
Average Inventory Balance

365 days
Average Inventory Period = -----------------------------
Inventory Turnover

Sales
Receivables Turnover =
---------------------------------------------------------
Average Accounts Receivable Balance

365 days
Average Collection Period = --------------------------------
Receivables Turnover

Solvency Ratios

Debt (exclude A/P & salaries)
Debt to Asset Ratio = ----------------------------------------------
Total Assets

Debt (exclude A/P & salaries)
Debt to Equity Ratio = ----------------------------------------------
Total Equity

Operating Income
Interest Coverage = ----------------------------
Financing Costs

Profitability Ratios

Gross Margin
Gross Margin Percentage = ------------------------ X 100%
Total Revenues

Operating Income
Operating Margin Percentage = --------------------------- X 100%
Total Revenues

Net Income
Net Income Percentage = --------------------------- X 100%
Total Revenues

Net Income
Earnings Per Share (EPS) = -------------------------------------------
Average Shares Outstanding

Market Price of Stock
Price Earnings Ratio = ----------------------------------
Earnings Per Share

Dividend
Dividend Payout = -----------------------------------
Market Price of Stock

Earnings After Tax - Preferred
Dividends
Return on Equity (ROE) =
---------------------------------------------------------------
Equity - Preferred
Stock

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